Loan Vocabulary

Principal: The original amount you borrow.

The amount you must repay is more than the original principal that you borrow because the lender charges you for the use of the money.

Interest: The additional charge on your loan.

Fees: Additional cost for use of the borrowed money.

Cosigner: A person who agrees to be jointly responsible for repaying a loan along with the borrower.

A creditworthy cosigner often enables a borrower lacking sufficient credit history to qualify for a loan.
The addition of a cosigner on a loan may result in better loan terms (e.g., lower interest rate or lower fees).
The cosigner is equally responsible for the debt as long as it is outstanding, unless formally released from the obligation during repayment.
A cosigner is not required for a federal loans, but is usually required for other types.