If you're struggling to qualify for an auto loan due to your income, you may be able to get approved by applying with a co-borrower. This is considered a joint car loan application, and it's typically done with a spouse because your incomes can be combined in order to qualify together.
Joint Auto Loans
Joint auto loans with a co-borrower differ from cosigner loans. In a joint car loan, both the primary borrower and the co-borrower are listed on the loan and the vehicle's title.
Your income can be combined with the co-borrower's income in order to meet the lender's income requirements. However, you can typically only combine incomes with a spouse.
Because both you and your co-borrower are listed on the loan, you're both responsible for making sure the loan is paid on time, and the consequences of not doing this are suffered by both.
Qualifying with a Co-Borrower
A co-borrower is typically used when you aren't able to qualify for an auto loan alone due to limited income. However, co-borrowers can be helpful in other ways, as well.
Adding a co-borrower with better credit can also help if you fail to qualify due to credit issues. Or, even if you qualify on your own, combining your incomes could help you get better terms. For example, you may be able to take out a larger loan, or get a better car than you'd be able to on your own.
If you apply jointly, both you and your co-borrower must meet all of the lender requirements on your own, with the exception of income. If you're looking to apply with a subprime lender due to poor credit, there are five basic requirements you have to meet:
- Proof of income – This is a combined total of the incomes of both you and the co-borrower. Lenders usually require a combined $1,500 to $2,000 a month at a minimum. Provide your most recent computer-generated check stubs showing year-to-date income to serve as proof.
- Proof of residence – A current utility bill or bank statement in your name for the address listed on the application.
- Proof of a working phone – A current phone bill from a landline or contract cell phone company.
- Personal references – A list of around five to eight personal references with full names, addresses, and home and work phone numbers.
- A down payment – A typical down payment for a bad credit auto loan is at least $1,000 or 10% of the vehicle's selling price, whichever is the lower amount.
Each of these factors generally needs to be met in a joint car loan.
Find the Car Loan You Need
Remember, if you're having trouble qualifying for a loan on your own, or you and your spouse want to get a vehicle together, having a joint auto loan is the way to go. By adding a co-borrower, you could get just the boost you need.
If you're struggling with credit issues and want to get a car loan with a co-borrower, your best chance for an approval is usually with a subprime lender. These lenders work with bad credit borrowers through special finance dealerships.
Auto Credit Express is teamed up with a nationwide network of these special finance dealers. We'll work to match you with a local dealership if you fill out our quick and easy auto loan request form. Get started today!