If you’re dealing with less than perfect credit, or you’re new to the world of credit, you may find that a cosigner can help you get a car loan.
Benefits of Having a Cosigner
In some cases, a lender may require you to have a cosigner in order for you to qualify for an auto loan. If this is the case, make sure your cosigner meets the lender’s basic requirements before heading to the dealership. If you don’t have a cosigner, but aren’t sure if you need one, consider these three big benefits of having a cosigner:
- Helps you build credit – The first big benefit to having a cosigner is the ability to improve your credit. Credit is king when it comes to big purchases – such as a car or house – and poor credit affects your chances of getting approved for a loan. But, by asking someone to cosign for an auto loan, you’re “borrowing” their good credit in order to qualify for the loan. Then, you can boost your credit score by making all of your loan payments on time.
- Helps boost your income – If you don’t meet the lender’s income requirement (generally $1,500 to $2,000 a month before taxes) you can add your spouse’s income if they become your cosigner. You can only combine incomes if the signers are married, so keep this in mind.
- Adds garnishable income – In addition, lenders require you have some type of garnishable income. If your income only comes from social security or disability, for example, you won’t be able to qualify for a bad credit car loan. But, if you have a cosigner with garnishable income, who meets the debt to income and payment to income standards as well as the general income requirement, they can help you get approved by becoming a cosigner.
The Bottom Line
Whether you need a cosigner or not, if you’re dealing with poor credit, it’s a good idea to consider having one. There are many benefits to having a cosigner on an auto loan, and when your credit improves you may be able to remove the cosigner by refinancing the loan. If you’re ready to take the next step toward improving your credit with a car loan, let Auto Credit Express help out.
We connect people dealing with imperfect credit to local dealerships that specialize in helping car buyers in all types of credit situations. Our service is free, fast, and puts you under no obligation to buy. Start right now by filling out our free and secure auto loan request form.