Co-Applicant vs Guarantor: Understand the Critical Difference Before You Sign!

• Signing as a Co-Applicant makes you a joint owner of the loan, with shared responsibility for EMIs and direct impact on your CIBIL score.
• A Guarantor provides a promise to pay if the primary borrower defaults; initially, it doesn't affect CIBIL, but default leads to full liability and legal issues.
• Banks involve a second person (Co-Applicant or Guarantor) to mitigate risk, especially for applicants with low salary, new jobs, or large loan amounts.
• The key difference lies in immediate liability and CIBIL impact: Co-Applicant's loan is active debt, while Guarantor's liability activates only upon default.
• Always assess if you can repay the entire loan yourself before signing, as emotional decisions can lead to significant financial and relational risks.

Why It Matters: Understand the distinct financial and legal risks of Co-Applicant vs Guarantor roles before signing any loan document.