Question 7 of 9 What is the correct definition of capacity for potential cosigners? The cosigner's credit history The cosigner's financial assets, such as a house or car The cosigner's current financial situation The cosigner's past record of paying on time

## Step 1<br />The term "capacity" in the context of potential cosigners refers to the ability of the cosigner to fulfill their financial obligations. This is a measure of the cosigner's financial health and their ability to pay off the debt if the primary borrower defaults.<br /><br />## Step 2<br />The cosigner's credit history is a crucial factor in determining their capacity. This is because a good credit history indicates that the cosigner has a history of paying off their debts on time.<br /><br />## Step 3<br />The cosigner's financial assets, such as a house or car, are also important. These assets can be used as collateral to secure the loan, which can help the cosigner pay off the debt if necessary.<br /><br />## Step 4<br />The cosigner's current financial situation is another important factor. This includes their income, expenses, and overall financial health. A strong financial situation indicates that the cosigner has the ability to pay off the debt.<br /><br />## Step 5<br />The cosigner's past record of paying on time is also a crucial factor. This shows the cosigner's reliability and their ability to meet their financial obligations.