If you’re dealing with bad or even no credit and need a car, lenders may require you to have a cosigner. When deciding who you should get to cosign for you, you’ll want to know what the basic requirements are, and ask the person for permission.
Car Loan Cosigner Requirements
When picking a cosigner, the first thing you’ll need to do is ask for their permission. Not everyone is willing to cosign, because it means putting their credit and finances on the line for you.
A cosigner has to sign the car loan alongside a primary borrower. This helps the primary borrower get approved, but it means the cosigner has to take on some responsibilities. By signing the agreement, the cosigner agrees to pay back the loan in the event the primary borrower doesn't and make the loan a part of their credit even though they don't have any ownership rights to the vehicle.
For these reasons, it's important that you ask somebody you're close with and make sure they understand what they're agreeing to. Once you have a cosigner’s approval, there are two things they must meet in order to qualify with a lender:
- Creditworthiness – The cosigner must have a good credit score in order to help you qualify for an auto loan. The specific credit score requirement will vary by lender, but anyone with a credit score above 700 will typically meet it. Lenders look for cosigners with a good credit score because it reassures them that the loan will be paid on time.
- Ability to pay – The cosigner must make a sufficient amount of income to meet the lender's standards. Lenders want to make sure that the cosigner is able to afford the loan in the event the primary borrower defaults.
Finding an auto loan cosigner can sometimes be difficult. Consider close family members and friends, and ask if they’d be willing to help you out. Make sure the cosigner knows what they're signing up for, as it's only possible to remove a cosigner once you build up your credit enough to qualify for refinancing on your own.
If you’re ready to finance a car, but are worried your bad credit will get in the way, don’t stress. Let Auto Credit Express help you find a dealer in your area. Getting started is simple. Just fill out our online auto loan request form today.