If lenders are denying you a car loan based on your credit score, finding a cosigner could be a solution. However, cosigners are typically required to have good credit. Here’s what to look for in a cosigner.
Requirements of a Cosigner
When you’re scouting for a cosigner to increase your auto loan approval odds, look for someone with disposable income that can cover your payments if required, and someone with a long-standing, healthy credit history and a credit score above 660 (considered good credit).
Lenders vary in their exact cosigner requirements, but cosigners must typically be able to meet all the same or similar lending requirements that you are. The purpose of having one is so that you can “borrow” their good credit score to help you meet auto loan requirements. Cosigners must also promise to make the car payments if you can’t. Additionally, in a lender's eyes, cosigners with good credit history may have a higher chance of helping you.
If you bring a cosigner that has a lower credit score than yours and no income, they’re not very likely to assist you in getting a car loan. A cosigner with poor credit may also not be of much help in qualifying for a low interest rate on a car loan either, since credit scores are usually the main factor in what interest rate tiers you’re placed in.
Can’t Find a Cosigner?
Not every bad credit borrower has someone they can ask to be a cosigner. However, keep in mind that a cosigner doesn’t need to be a family member. They can be a friend, co-worker, acquaintance, roommate – your relationship with them doesn’t matter. Auto lenders want to know if they have good credit and would be able to assist you with repaying the loan if you can’t.
The only person that can’t cosign a car loan with you is a spouse, since they would become a co-borrower instead.
Remember that when asking someone to be a cosigner, they’re going to be responsible for your auto loan if you’re unable to keep up. They’re directly tied to the activity on the loan, so if you miss a payment, their credit score is going to be impacted, too. This also means that when you maintain a good payment history on the cosigned car loan, you and the cosigner both benefit from the positive, timely car payments!
Need to Go it Alone?
If a cosigner is out of the question for your situation, and your credit score is making it tough to get the vehicle you need, then exploring subprime auto loans could be your next step.
Subprime lenders are signed up with special finance dealerships, and they’re no strangers to credit challenges. If you’re in need of vehicle financing and want to get connected to a dealer that’s signed up with subprime lenders, then look no further than Auto Credit Express. Once you complete our free auto loan request form, we’ll look for a special finance dealership in your local area.