Coborrower

A coborrower is a person who shares responsibility for repaying a loan with one or more other borrowers. On a loan agreement, each coborrower is typically legally liable for the full amount, and lenders often consider the combined income and credit histories of all borrowers when evaluating applications. Coborrowers are common on mortgages, auto loans, student loans, and other forms of credit.

Coborrowers usually have the right to an ownership interest in the asset financed by the loan, such as a share of a home in the case of a mortgage, subject to the terms recorded with the lender and relevant title documents. The exact rights depend on the loan terms and accompanying legal instruments (such as the deed or title). Both parties’ names appear on the loan, and both may benefit from repayment history improving their credit scores.

Financially, the existence of a coborrower means that late payments or defaults affect both borrowers’ credit. Since both are liable, lenders can pursue collection from either or both parties. Timely payments generally benefit both borrowers’ credit profiles.

Coborrowers are often contrasted with co-signers. A co-borrower is typically also a borrower with ownership rights and ongoing liability for the loan, whereas a co-signer primarily guarantees the loan and may not have ownership or usage rights in the asset. Lenders and borrowers should review the loan documents to understand each party’s obligations.

Removal or release of a coborrower from liability usually requires refinancing, modification, or other lender-approved steps.