What typically happens to the loan if a co-signer is unable to pay?

When a co-signer is unable to pay, the lender retains the right to pursue all associated parties for repayment. A co-signer is someone who agrees to back the loan, usually to help the primary borrower qualify for the loan or receive better terms. If the primary borrower defaults or misses payments, the lender can demand repayment from either the borrower or the co-signer since both are legally responsible for the loan.

This ensures that the lender has multiple avenues to recover the owed amount, which mitigates their risk. The lender's right to pursue all parties involved helps protect their financial interests. As a result, if a co-signer defaults, the lender may choose to contact either the borrower or the co-signer to seek repayment, rather than immediately canceling the loan or initiating foreclosure.