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What Does Consigner Mean?

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on April 11, 2022

Consigners, or co-signers, are people who take responsibility for another person’s debt.

Consigning with another person can be a risky business when you have to pay if that person doesn’t pay on time and sometimes it can be a rewarding experience because your friend might return the favor someday. 

It requires trust and communication between all parties involved. Consigners should be treated as part of the family as they can financially help or damage you as a credit holder.

Roles and Responsibilities of a Consigner

The following are the roles and responsibilities of a consigner:

  1. Consigners take responsibility for paying debts owed by another person.
  2. Consigners should be aware of what they are getting into, that is, it’s the consigner’s job to understand their responsibilities and limitations as a cosigner before signing off on loan applications.
  3. Consigners should inform themselves about the loan application before signing it.
  4. Consigners should keep in contact with the credit issuer by following up on the status of the loan, especially if they are unsure about how their cosigner is doing.
  5. Consigners should never try to become the primary borrower unless the original borrower defaults on payments for a significant amount of time. Consigners should always make this clear with credit issuers to avoid confusion and/or problems down the line.

Who Needs Consigners? 

Any person who is to take on large amounts of debt may need a consigner, for example, a married couple with one income going through school, people with no credit history, or someone with a bad credit history. 

Consigners are often used in many different financial situations so that the person borrowing money may be able to get a lower interest rate, a larger loan, or even approved for a loan when they would not have been approved on their own.

Reasons to Need a Consigner

There are many reasons why a person may need consigners. 

  1. They may not have a good credit history.
  2. They may not have enough income to repay the loan on their own.
  3. The loan amount may be too large for them to repay on their own.
  4. The lender may require a cosigner if the borrower does not meet the requirements for other reasons, such as age or citizenship.

Benefits of Having a Consigner

Having a consigner on your loan can benefit the borrower in many ways: 

  • Consigners often offer repayment plans that are much more flexible than those offered by a borrower without a cosigner
  • Consigners can help the borrower get a lower interest rate on their loan. 
  • Consigning with someone shows the lender that the borrower is serious about repaying the debt and that they have someone who will help them if they cannot repay the debt on their own. 
  • Consigning can also help the borrower get a larger loan. 
  • Consigning can also help people with bad credit get loans who would not have been able to without consigners or someone to cosign their debt.
  • Consigners can help build or re-establish credit for the main borrower.
  • Consigners can act as a financial backup in case of an emergency.

Dangers of Being a Consigner

There are also dangers in consigning, some of these are:

  • If the borrower does not repay the loan, the consigner is responsible for repaying the debt. 
  • The credit score of the consigner can be affected if the borrower does not repay the loan. 
  • If the borrower files for bankruptcy, the cosigner’s assets may be seized to repay the debt.

It is important that both parties understand and agree to the risks of consigning before signing any documents.

Things to Consider Before Becoming a Consigner

Before becoming a consigner, it is important to consider the following:

  1. Are you able to repay the debt if the borrower does not?
  2. What are the potential consequences for you if the borrower does not repay the debt?
  3. How will being a consigner affect your credit score?
  4. Can you afford to lose any money if the borrower defaults on the loan?
  5. Are you comfortable being responsible for the debt if the borrower does not repay it?

Key Takeaways

Consigners are often used in many different financial situations so that the person borrowing money may be able to get a lower interest rate, a larger loan, or even approved for a loan when they would not have been approved on their own.

There are many reasons why a person may need consigners. Consigners often offer repayment plans that are much more flexible than those offered by a borrower without a cosigner Consigners can help the borrower get a lower interest rate on their loan. 

Consigning with someone shows the lender that the borrower is serious about repaying the debt and that they have someone who will help them if they cannot repay the debt on their own. It can also help the borrower get a larger loan.

If you decide to become a consigner, it should be well-thought-of and both parties should understand the consequences of assuming the role.

A Consigner is someone who agrees to be responsible for the debt if the borrower does not repay it.
There are many reasons why a person may need a Consigner. Some reasons include: having a bad credit history, not having enough income to repay the loan on their own, or not being a U.S. citizen.
There are many benefits to having a Consigner. Some include: getting a lower interest rate on the loan, getting approved for a loan when you would not have been approved without one, and getting a larger loan.
Consigning with someone shows the lender that they have someone who will help them if they cannot repay it alone. Consigned debts are usually reported to the credit bureau, which can negatively affect your credit score.
If the borrower does not repay the debt, the Consigner is responsible for repaying it. This can lead to consequences such as wage garnishment, seizing of assets, and even legal action.

Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.