Your cosigner on a car loan doesn’t have to live in the same state as you. Some lenders may ask your cosigner to sign the loan contract in person, but as long as they qualify to be a cosigner, it doesn’t matter where they live.
Car Loan Cosigner Requirements
Not just anybody can cosign an auto loan for you. In order for someone to qualify, they need to meet the basic cosigner requirements set by the lender. These include:
- Good credit – Lenders look to see that your cosigner has a good credit score, preferably one of at least 700 or higher. This is because the cosigner's main role is to help the primary borrower get approved by letting them "borrow" their good credit.
- The ability to afford the loan – A cosigner also has to have enough income to qualify because they're responsible for making the loan payments if the primary borrower falls behind. This generally means that the cosigner has to meet the lender's minimum income requirement (typically $1,500 to $2,000 a month) and can't have a debt to income ratio that's higher than 50 percent, although this varies by lender.
- 18 years old – Just like you have to be to enter a loan contract as a primary borrower, any cosigner has to be at least 18 years old to qualify.
- US citizenship – The cosigner must be a US citizen, they can't just be a lawful permanent resident.
As you can see, it doesn't matter whether or not your cosigner is from out of state. Just be aware that it's likely that they're going to need to be at the close of the deal to sign the paperwork.
Adding or Removing an Auto Loan Cosigner
A cosigner agreement isn't something to enter into lightly. The cosigner puts their finances and credit on the line for the primary borrower, which is why it’s important to have an open line of communication and a plan of action set beforehand.
Because this can be more complicated if the cosigner is from out of state, you may be wondering if you can add or remove a cosigner from a car loan. To do this, you have to refinance your current loan.
If you want to make your auto loan more affordable by reducing your interest rate, adding a cosigner with good credit through refinancing could do the trick. If you want to remove a cosigner from your car loan, the key is to make sure your credit has improved since taking out the original loan.
If it hasn’t, you may not be able to refinance and remove a cosigner. If you do qualify to refinance but removing the cosigner means your interest rate is going to go up, you may want to reconsider removing them for now.
The Bottom Line
When you have bad credit, a cosigner could be your ticket to getting the loan you need. You just need to make sure they qualify to be a cosigner before you head to a dealership, which you now know has nothing to do with whether or not they live in the same state as you.
If you need help finding a dealer that can get you financed, Auto Credit Express wants to help. We are partnered up with a coast-to-coast network of dealerships that are experts at assisting people who are dealing with credit problems, and we want to connect you with one in your area.
Getting the process started is simple, just fill out our car loan request form online, and we’ll get to work matching you with a local dealer right away!