Final answer:
A cosigner is someone who legally agrees to pay off a loan if the original borrower doesn't, providing lenders with additional security. Banks may also use collateral to secure a loan, allowing them to reclaim value if the loan is not repaid.
Step-by-step explanation:
In the financial capital market, securing a loan often requires a thorough evaluation of the borrower's financial background. This includes filling out forms regarding sources of income and undergoing a credit check on the individual's past borrowing behaviors.
One common strategy to mitigate the risk of lending is to involve a cosigner, which is another person or firm that legally pledges to repay some or all of the money if the original borrower fails to do so. In addition, lenders may require collateral, such as property or equipment, which can be seized and sold to recover the loan amount if the borrower defaults.
*complete question
Co-signing is a great way to help a friend or family member. Who is a cosigner?