Which statement best describes the liability of a co-signer on a loan?

• A. The co-signer is solely responsible for the loan's terms.
• B. The co-signer is not liable if the borrower misses payments.
• C. The co-signer is legally responsible for the loan if the borrower defaults.
• D. The co-signer's liability ends after the first year.

Answer: (C)

Co-signing a loan means you agree to be equally responsible for repayment if the borrower can’t pay. You sign a contract that makes you liable to the lender just as if you had borrowed the money yourself. If the borrower misses payments or defaults, the lender can come after you for the full amount, and the loan can affect your credit as well. This obligation isn’t limited to a fixed period or tied to the borrower’s on-time payments; it remains until the loan is fully paid off or you’re released from the obligation by the lender, if that option is available. Being a co-signer is a serious commitment, so it’s only done when you’re willing and able to take on the debt and the risk to your own credit.