When you have bad credit, getting approved for an auto loan can be more difficult. Oftentimes, people who want to give their application an extra boost look for a cosigner to help their approval chances. But what should you be looking for in a cosigner when you have bad credit?
Bad Credit Car Loan Cosigner Requirements
When it comes to finding a cosigner, there are some important things you need to consider. A subprime lender is going to have requirements that the cosigner must meet. These tips will give you a better idea of what you should be looking for in a cosigner.
- A Good Credit Score
When you have bad credit, you need to make sure your cosigner has good to excellent credit. For most lenders, they want the cosigner's credit score to be 700 and above. Essentially, the arrangement will allow you to "use" their high credit score to compensate for your lower one. As a result, having a cosigner helps your chances of being approved.
- A Regular Income and an Ability to Pay the Loan
A cosigner on a bad credit auto loan will need to individually meet the lender's income requirements. Also, their recurring debt (monthly bills) will be evaluated. These measures are taken so that a lender can make sure a cosigner can meet the obligations of the loan should the primary borrow miss a payment (or default).
A good cosigner is somebody who meets these requirements, so keep them in mind if you are looking for one.
Another Helpful Tip for Your Benefit
Finally, although not a lender requirement, you are also going to want to make sure you have a strong relationship with your cosigner. Any such agreement should not be made lightly. There are responsibilities and hazards that come with using a cosigner on a bad credit car loan.
The cosigner needs to sign the contract, assume loan responsibility, and understand they can be subject to collection action should the worst occur. On that same note, you need to understand the huge favor they are doing for you. Not only are they helping you get approved, but they are putting their good credit on the line for you.
This is why it is important that you only choose somebody that you have the strongest of relationships with to be your cosigner. That's because you will want to be able to openly communicate with them if issues come up.
Most people usually only ask a family member or the closest of friends to be a cosigner. And now you can consult the list of bad credit car loan cosigner requirements above to help you find yours.
Getting Approved for Auto Financing
Dealing with credit issues and having trouble getting approved for an auto loan? Auto Credit Express can help. We can quickly and easily connect you with a dealership near you that stands to give you your best shot at an approval. Our process is free and puts you under no obligation, so you have nothing to lose. Go ahead and complete our simple and secure online application today.