Question & Answer

Question: What is the difference between a co-applicant and a joint applicant? Are these different from a co-signer?

Answer: Under federal compliance regulations, there is no difference between a co-applicant and a joint applicant. It's up to you and your bank to decide which term to use. Under Regulation B, these terms describe two or more consumers who choose to apply together for credit in both of their names.

Co-signers are another matter. A co-signer is an individual brought in to support the application of the original applicant to help them qualify for credit. A co-signer is not requesting credit for their own purposes. Regulation B has special restrictions and requirements that apply to co-signers. Also remember that Regulation AA contains notice requirements to co-signers. For purposes of that rule, a co-signer is an individual who becomes obligated on the note but will not benefit from the loan. In other words, the co-signer may become obligated to pay the loan but doesn't get the car that was purchased with the loan proceeds.

Copyright © 1995 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 1, 11/95