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In AB, what should I know about using a co-signer for car loans?
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In AB, what should I know about using a co-signer for car loans?

In Alberta, utilizing a co-signer for a car loan can significantly enhance your application's strength, often proving essential for borrowers with limited credit history, lower credit scores, or insufficient income. A strong co-signer, possessing excellent credit and stable income, can improve your chances of approval and help secure more competitive interest rates, which is particularly relevant in the current (2025) market characterized by tighter lending standards. However, it is paramount for both parties to understand that the co-signer assumes full and equal legal responsibility for the entire debt. Under Canadian contract law, applicable within Alberta, if the primary borrower defaults on payments, the lender has the right to pursue the co-signer for the full outstanding balance, including all principal, interest, and fees. This shared liability means a default will negatively impact the co-signer's credit rating, just as it would the primary borrower's. This matters because while a co-signer can unlock financing opportunities, it creates a substantial financial obligation and potential risk for them, underscoring the need for clear communication and a robust repayment plan to protect both financial futures and personal relationships.

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