Many bad credit borrowers are advised to get a cosigner to increase their chances of qualifying for an auto loan. However, having a cosigner doesn’t mean you have a 100% chance of getting approved.
Cosigners and Car Loans
When you bring a cosigner along for the ride, they provide more security for the loan. A cosigner promises to repay the loan if you can’t, so a lender is more likely to consider you for financing because there’s more than one person willing to repay it. Additionally, choosing a cosigner that has a good history of repaying loans can also increase your chances of qualifying.
However, depending on your credit score, the cosigner’s credit score, and all the other factors that go into vehicle financing, a cosigner may not be that much help.
A cosigner isn't a cure-all for every situation. They can “lend” you their good credit score to help you meet auto loan requirements, but if your credit reports have serious negative marks or you fall short in other areas, you could still be denied a car loan with a cosigner.
Here are some situations where having a cosigner may still mean getting denied an auto loan:
- You have a dismissed bankruptcy on your credit reports
- You have a fresh car repossession (less than 12 months old) on your credit reports
- You don’t have enough available income to repay the loan
- Your cosigner has a poor credit score
- Your cosigner's credit score is lower than yours
- Your cosigner doesn’t have enough available income to repay the loan
Cosigners and Income Requirements
Income is a major factor in auto loan eligibility. If your income doesn’t meet the requirements, your cosigner’s income isn’t added to yours – they’re considered separately. A cosigner doesn’t help you make the car payments each month, so your income is what’s used to determine your eligibility for the auto loan.
If you need more available income to qualify for a car loan, then having a co-borrower may be what you need. Or consider cutting out some monthly expenses to lower your debt to income ratio.
Bad Credit Auto Loans Without a Cosigner
Cosigners can certainly widen your auto loan opportunities, but they can’t help in every situation. For borrowers with severely damaged credit, or those who don’t have the luxury of having a cosigner in the first place, there are bad credit lending options to consider.
Buy here pay here (BHPH) dealerships are known for skipping the credit check. Bad credit borrowers are typically asked to bring a cosigner because they have credit issues, so going with a dealer that may skip the credit pull could mean not needing a cosigner. However, you still need to meet income requirements and likely need a down payment.
Subprime auto lenders are signed up with special finance dealerships. They specialize in assisting borrowers with unique credit challenges, including bankruptcy, situational bad credit, and no credit. Since a subprime lender considers more than just your credit score, a cosigner may not be required to qualify. There are still income, down payment, and residency requirements to meet.
Get Connected to a Dealer
Instead of looking for the right lender on your own, let Auto Credit Express handle it. We’ve created a nationwide network of special finance dealerships over the last 20 years. Complete our free auto loan request form, and we’ll look for a dealer in your local area that’s equipped to help with many unique credit circumstances.