You should include a cosigner with your promissory note if you are unsure of the borrower’s ability to repay the loan on her own. Maybe the borrower has little to no credit history, so it’s hard for you to judge from past behavior whether or not she would meet her obligations. Maybe you’re helping a friend out with a business loan, but you’re not very familiar with your friend’s business model or industry. In either of these cases, assuming you still want to lend your friend money, it may be good to require your friend to include a cosigner, someone with reliable credit history and a steady stream of income.

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Along with the standard terms of any promissory note (like amount borrowed, payment schedule, etc.), a promissory note that includes a cosigner must have the signature of the cosigner on the note. A promissory note with cosigner typically has language in the note where the cosigner guarantees the debt or agrees to all the same obligations and liabilities that the borrower is taking on.