If you have bad credit, you may be asked to have a cosigner on a car loan in order to get approved. A cosigner can’t be just anyone – they have to meet the loan and cosigner requirements and understand what it means to be a cosigner.

The Cosigner’s Role

A cosigner signs an auto loan alongside a primary borrower. The cosigner’s main role is to help the primary borrower get approved for financing. Although a cosigner doesn’t have any legal rights to the vehicle, they’re legally obligated to the loan. This means they are responsible for payments in the event the primary doesn't make them.

If the loan is paid as agreed, the cosigner’s credit score improves along with the primary borrower’s. If neither the primary borrower nor cosigner pays, the car can be repossessed, collection action can be taken against either one, and the credit scores of both are negatively impacted.

A cosigner is also bound to the contract until the loan is paid off. This means they can’t simply back out of the agreement if things go south. The only way to remove a cosigner is if the primary borrower refinances the loan on their own.

Cosigner Requirements for a Car Loan

What does it take to be a cosigner? The first thing they need is to have good credit. Lenders, subprime or not, typically look for cosigners with a credit score of at least 700, but this varies. A cosigner doesn’t necessarily have to live in the same state since the lender is more concerned with their credit score, but some lenders require the cosigner be present to sign the loan documents.

A cosigner must also be a US citizen, not a lawful permanent resident. Finally, lenders aren’t concerned about where a cosigner’s income comes from, which means they can be retired or on disability. As long as they have good credit, they typically can qualify to be a cosigner on an auto loan.

The Bottom Line

If you’re looking to take out a car loan and have bad credit, it doesn’t hurt to have a cosigner on hand just in case one is required. Make sure you discuss with the person you choose what it means, the requirements, and why you want them to be your cosigner. The more you make things easier to understand now, the less likely you’re going to run into issues with your cosigner once you both sign the auto loan documents.

When you and your cosigner are ready to take the plunge, we want to be your guide toward finding financing. At Auto Credit Express, we connect car buyers in unique credit situations to local dealerships that are special finance experts. We can help you find a dealer in your area if you fill out our free and secure auto loan request form online.