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

In Ontario, utilizing a co-signer for a car loan means another individual legally agrees to share full responsibility for the debt if you, the primary borrower, default on payments. This strategy is often employed by applicants with a limited or developing credit history-such as new immigrants or young adults-or those with a lower credit score, as a strong co-signer significantly enhances the loan application's strength, potentially leading to approval and more favourable interest rates, especially in the 2025 market where lending criteria may be more stringent. However, it is paramount for the co-signer to fully grasp their legal obligation: they are equally liable for the entire loan amount, and their credit score will be directly impacted by the loan's performance. This matters profoundly because any missed payments or default by the primary borrower will negatively affect the co-signer's credit report and financial standing, potentially leading to collection actions against them and straining personal relationships. Both parties must therefore enter into this arrangement with a clear understanding of the substantial financial commitment and potential risks involved.

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