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Learn about co‑borrowing

Make an informed decision

Co‑signing a loan

Not everyone who needs financing has the credit history to qualify. This could be an issue for students and newcomers to Canada.

Whether you're taking out a loan with a co-borrower or co-signing a loan for someone else, it's important to understand the financial and legal implications so everyone is on the same page.

5 things to know about co-borrowing

Man hugs a young female graduate

What's the difference between a co-borrower and guarantor?

Guarantors and co-borrowers are equally responsible for repaying the loan in full if the primary borrower fails to do so. The difference? A guarantor can co-sign a student line of credit or credit card application. A co-borrower is required for any other type of financing.

Man knots the tie of a younger man

Who can be a co-borrower?

Co-borrowers need to have good credit and show that they can take on the loan if the primary borrower cannot make the payments.

It's most common for a parent to co-sign for their child, but you can also get a spouse, friend or anyone else to be your co-borrower.

Man knots the tie of a younger man
Man knots the tie of a younger man
Man knots the tie of a younger man
Two women sitting at a table with a man

What's a co-borrower signing up for?

A co-borrower's obligations can vary, so it's important to know what you're getting into. Ask for your own copy of the loan agreement.

Think about how this decision may affect your credit. The loan will go on your credit record and increase your debt load, even if the primary borrower makes all of their payments on time. This may make it more difficult for you to take out a loan in the future.

Yound child looks at a man sorting his papers

Should you look for a co-borrower?

Weigh your options. Should you save up rather than borrowing?
If you have a bad credit rating, it may be a better idea to learn how to manage your debt to raise your credit score.

On the other hand, having someone with good credit co-sign a loan is a great way for first-time borrowers to start building a credit history—as long as you don't fall behind on your payments. Choose someone trustworthy and responsible, and always discuss the terms of a loan before co‑signing.

Yound child looks at a man sorting his papers
Yound child looks at a man sorting his papers
Yound child looks at a man sorting his papers
Young woman and young man with arms crossed talk on a couch

What happens after a separation or divorce?

Even if you and your spouse separate or divorce, you are both still responsible for any debts you co-signed for.

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