Having a cosigner on a bad credit auto loan means more than just having someone sign it with you. Cosigners have big responsibilities, and could face real consequences if something goes wrong. For this reason, not just anyone can qualify to cosign your loan.
What Does it Take to Be a Cosigner?
Not just anyone can be a cosigner on a bad credit car loan. If you need one, it's typically because lenders are on the fence about approving you.
For this reason, lenders require cosigners to have good credit. When you add a cosigner to your loan, you're essentially borrowing their good credit score in order to be approved.
Their credit score is only the tip of the iceberg, though. A cosigner has a much bigger role than helping you get approved, but this role only comes into play if you can't keep up with your payment. This is because cosigners act as safety nets of sorts, agreeing to pick up the slack if you fall behind.
Since a cosigner approves these terms when they sign your loan, lenders also need to ensure that they have the financial ability to make these payments if you can't. This means your cosigner has to qualify for the loan, too. Lenders need to see that a cosigner has enough available income to take over the payments if they have to.
Typically, qualifying to be a cosigner means meeting most of the requirements that you have to meet. In general, this means your cosigner must meet the debt to income requirement in addition to having a good credit score.
Responsibilities and Consequences of Cosigning
Now that you know that a cosigner is responsible for picking up the slack when you can't pay, you also need to know the consequences of this. If you have a cosigner and stop making the payment, both yours and their credit score drops if they don't pick up where you left off.
If your cosigner isn't able to make your payment, your vehicle can get repossessed. The repo shows up on both of your credit reports. What's worse is that the lender can come after your cosigner to collect this debt even after a repossession.
After all, your cosigner agrees to take responsibility of the auto loan in the event you fail to. It's important to take all these things into consideration before asking someone to cosign your car loan.
Communication is also a key element of a successful borrower/cosigner relationship. If you find yourself facing difficulties with your loan, let your cosigner know what might be coming so they can prepare to step in for you.
If you know an issue is arising, it's also important to talk to your lender. If you let them know that you may have some upcoming trouble paying, they may be able to offer you options to help before it gets to the point where your cosigner has to step in.
Ready to Find Your Next Auto Loan?
If you're ready to finance your next vehicle and have bad credit, a cosigner on your auto loan might help. Make sure you choose a cosigner carefully, and that they're aware of the responsibilities of what cosigning means.
If you're not sure what the next step should be after you find a cosigner, let us help. Here at Auto Credit Express, we want to get you matched with a local special finance dealership so that you can get a bad credit car loan.
To get the process started, fill out our fast, no-obligation auto loan request form. You can even include your cosigner on your request, so that the dealer knows that you don't want to go it alone. So, what are you waiting for? Take the first step now!