If you need help qualifying for a bad credit car loan, a cosigner could be your answer. We're exploring who can be a cosigner, and what requirements a cosigner usually has to meet to help you be considered for an auto loan approval.
Looking for a Car Loan Cosigner
When it comes to someone signing onto a car loan with you, one of the most important things is asking someone who has a good enough credit score. There isn’t an exact threshold that your cosigner needs to meet, but their credit history and credit score should be significantly better than yours. If their credit score is considered bad, or below around 660, they may not be able to help you get approved for an auto loan.
A cosigner boosts your chances of a car loan approval by “lending” you their good credit score. If they don’t have great credit, it doesn’t lower your risk as a borrower, which means you aren’t more likely to be considered for auto loan approval.
Another important thing to consider when you’re looking for a cosigner is whether or not they have enough income. Cosigners also lower your risk as a bad credit borrower by promising to pay for the car loan in the event that you can’t, which lessens the chance of you defaulting on the loan. They aren’t there to help you make the payments each month, you must strive to do that on your own. But if you get in over your head, the cosigner steps in to pick up the slack.
Who Should I Ask to Be My Cosigner?
When it comes to the actual individual, most credit-challenged borrowers typically ask a family member to cosign on the loan. Many first-time car buyers enlist the help of a parent so they can give their credit history a good jumping-off point.
You can typically have anyone as a cosigner unless they are a spouse; in which case, your spouse would become a co-borrower since your incomes are usually intertwined. Really anyone else – a friend, cousin, or coworker – can sign onto your auto loan with you if they meet the minimum income and credit score requirements.
On top of your cosigner meeting the lender’s requirements, you should let them know that their credit score can be positively or negatively affected by the car loan. If you miss a payment, it not only impacts your credit, but your cosigner’s credit, as well. But, if you manage the auto loan well and keep up on the payments, it could mean better credit scores for both of you.
Is a Cosigner a Guaranteed Loan Approval?
Just having a cosigner isn’t a guarantee that you can get approved for your next car loan. They can lower your risk as a bad credit borrower, but you still need to meet the lender’s stipulations on your own.
If you’re working with a bad credit auto lender, this usually means meeting requirements such as:
- A minimum monthly earned income around $1,500 to $2,500, proven with a recent computer-generated paycheck stub.
- A down payment of at least $1,000 or 10% of the vehicle’s selling price.
- Proof of a working cell phone or landline phone in your name, proven with a bill (can’t be a prepaid cell phone).
- Proof of residence, usually proven with a utility bill or recent bank statement.
- List of five to eight personal references with complete contact information.
- Driver’s license with current address listed (must be valid).
Having all these documents gathered means making your life easier by streamlining the car buying process with a bad credit lender. You should also ask about if the cosigner needs to provide any documentation.
Ready to Start Looking for a Lender?
If you’ve got an idea of who you want to ask to be your cosigner, finding a lender that can work with your credit situation is the next step. Although, having a cosigner isn’t always an option for every borrower – but that’s where subprime lenders can help.
Subprime lenders operate through a dealership’s special finance department to assist bad credit borrowers in getting their next auto loan. Finding a subprime lender could be as simple as filling out our free car loan request form. Auto Credit Express will look for a dealer in your area that’s equipped to work with credit-challenged buyers – so get started now!