If you have a less than stellar credit history and are in the market for a vehicle, you may need a cosigner to qualify for a loan. The good news is that you can often still get a car loan even if you have bad credit by having a cosigner. A cosigner is someone who agrees to take on responsibility for the loan alongside the primary borrower.
Generally, a cosigner can be any adult who is willing to take on the responsibility of repaying the loan if the primary borrower is unable to do so. This person is typically someone that the car buyer knows and trusts, such as a family member or close friend who has a good credit history, a stable income, and is willing to take on the risk of being a cosigner. However, not everyone is eligible to be a cosigner.
Key Takeaways
- A cosigner is someone who agrees to take on responsibility for the loan alongside the primary borrower.
- A cosigner must meet the lender’s requirements, which typically include being at least 18 years old, having a good credit score, and a stable source of income.
- Not all lenders allow cosigners, so you’ll need to check with the lender to see if it’s an option.
Understanding Cosigners
When you take out a car loan, you may need a cosigner to help you qualify for the loan. By agreeing to be a cosigner, the individual is taking on a significant risk. This means that the cosigner’s credit score can be negatively affected if the primary borrower defaults on the loan. As a cosigner, you have a legal obligation to pay the loan if the primary borrower is unable to make the payments. This means that you can be held liable for the full amount of the loan, including any interest, fees, and penalties.
It is important to choose a cosigner who you trust and who is willing to take on this responsibility. You should also make sure that the cosigner understands the risks and obligations involved in cosigning a loan.
Who Can Be a Cosigner?
So, who can be a cosigner on your car loan? The answer is that it depends on the lender’s requirements.
Generally, a cosigner must:
- Be at least 18 years old
- Have a good credit score
- Have a table source of income
- Be a US citizen or permanent resident
It’s important to note that not all lenders allow cosigners, so you’ll need to check with the lender to see if it’s an option.
When it comes to credit score, lenders usually require a minimum score of 670 or higher for a cosigner. However, some lenders may have different requirements, so it’s important to check with your lender to see what their specific requirements are. Lenders will also look at the cosigner’s employment history and income to determine their creditworthiness.
Who Cannot Be a Cosigner?
It’s worth noting that not everyone can be a cosigner, even if the above requirements are all met. For example, a spouse or domestic partner may not be allowed to cosign if they are listed as a joint owner of the vehicle. Additionally, some lenders may not allow relatives to cosign, while others may require that the cosigner be a blood relative.
When looking for a cosigner for your car loan, it’s important to find someone who has a strong credit score, credit history, and income. They should also have a stable employment history to show that they can pay off the loan if the borrower defaults. By finding the right cosigner, you can increase your chances of getting approved for a car loan and potentially even get a better interest rate. Ultimately, you’ll need to discuss your financing options and cosigner options with your lender to understand any eligibility requirements.
Frequently Asked Questions
Who qualifies as a cosigner?
Lenders will have their own specific cosigner requirements. Generally, any adult can potentially cosign on a car loan. This includes family members, friends, or acquaintances who are willing to help you secure financing for your car. Keep in mind that cosigning a loan is a serious financial commitment, so make sure to choose someone who you trust and who understands the responsibilities of being a cosigner.
Whose credit score is used for a cosigner on a car loan?
When you apply for a car loan with a cosigner, the lender will consider both your credit score and the credit score of the cosigner. The lender will evaluate the combined creditworthiness of both parties to determine whether or not to approve the loan, and what interest rate to offer.
Can a cosigner become the primary on a car loan?
If the primary borrower on a car loan is unable to make payments, the cosigner may be able to assume the role of primary borrower. However, this is not always possible, and it depends on the specific terms of the loan agreement. If you are considering cosigning a loan, make sure to read the terms of the agreement carefully to understand your rights and responsibilities.
If I cosign for a car, can I still buy a car?
Yes, cosigning a car loan does not prevent you from buying a car for yourself. However, keep in mind that cosigning a loan can affect your credit score and your ability to secure financing for other purchases. Make sure to consider the potential impact on your finances before agreeing to cosign a loan.
How long does a cosigner stay on a car loan?
The length of time that a cosigner stays on a car loan depends on the specific terms of the loan agreement. Some loans may require the cosigner to remain on the loan until it is paid off, while others may allow the cosigner to be removed after a certain period of time or after certain conditions are met. Make sure to read the terms of the loan agreement carefully to understand your obligations as a cosigner.