How does having a co-signer affect my financial terms?

Having a co-signer, also known as a guarantor, can make a noticeable difference to your personal loan terms in India. When you include a co-signer with a strong credit score and steady income, lenders see less risk in lending to you. This often means you can get a lower interest rate, a bigger loan amount, or more flexible repayment options. Lenders are more willing to approve your application, especially if your own credit profile or income is not strong enough on its own.

Both you and your co-signer are equally responsible for repaying the loan. If you miss an EMI or default, it impacts both of your credit scores. The lender can legally pursue the co-signer for repayment. This can put a strain on personal relationships as well as can affect your co-signer’s ability to get credit in the future. If your co-signer is a family member or close friend, open communication is crucial. Both parties should fully understand the risks and responsibilities before signing any documents.

Before asking someone to co-sign, make sure you trust each other and that you are confident in your ability to repay the loan on time. Set up reminders for EMIs and keep your co-signer informed about the loan status. If you face financial trouble, let your co-signer know early and talk to the lender about possible solutions. Having a co-signer is a big responsibility. Use this option wisely and always honour your commitments to protect both financial profiles.