Co-Borrower vs Co-Signer:
Key Differences Explained

Definition

A co-borrower is someone who shares responsibility for repaying the personal loan amount.

A co-signer is someone who signs a personal loan application on your behalf.

Accountability

They are co-owners of the credits obtained and split EMI payments, loan revenues, and any tax benefits that may be available.

Accepts repayment responsibility if the borrower fails to settle the loan on his or her own.

Personal Loan Requirements

Both borrowers' income and credit scores are taken into account by the lender for the allotment of the loan.

The lender considers the co-credit signer's score and income.

Pros

Both applicants are eligible for a larger tax break under Section 80C.

The principal borrower may be able to avail of a cheaper interest rate on an instant personal loan if they have a co-signer.

Cons

1.      Coordination of payments might be difficult if the co-borrower relationship deteriorates.

2.      In the event that the primary borrower dies, the co-borrower is solely responsible for repaying the debt.

1. If the primary borrower fails to make or delays payments, the co-signer will be held accountable.
2. The loan appears on the co-credit signer's record, and missing or late payments can have an impact on the co-financial signer's credit history.