In order for someone to cosign on a car loan for you, they need to have good credit. The biggest reason for this is because you’re essentially “borrowing” their good credit score in order to get approved for an auto loan. If that person doesn’t meet the lender’s minimum credit requirements for a cosigner – which is usually a FICO credit score of at least 670 or higher – then they can’t be a cosigner.

Other Car Loan Cosigner Requirements

Why Does My Cosigner Need Good Credit?Just having good credit isn’t the only requirement your cosigner needs if you want them on the loan. Your cosigner needs to qualify for the loan, themselves. This means they must have enough available income on top of a good credit score.

The lender is going to "debt out" both you and the cosigner individually to determine if you both meet their qualifications. They do this by calculating your debt to income (DTI) ratio, which looks at how much disposable income you have to use toward a loan payment.

Determining a DTI ratio is simple – add up all monthly bills, including estimated car loan and insurance payments, and divide the sum by the borrower’s pre-tax monthly income. Lenders typically cap a borrower’s DTI at around 50 percent, and won't approve applicants that are over their threshold.

What Are Your Cosigner’s Rights?

Now that you know what it takes for someone to become a cosigner, you need to know what their rights are. First and foremost, your cosigner doesn’t have any legal rights to the vehicle since their name isn’t on the title. However, your cosigner’s name is still listed on the loan, which means their credit is affected just like yours – for better or for worse.

With that said, in a sense, a cosigner is seen by the lender as a backup to you. If you as the primary borrower miss a payment or default on the loan, they can legally collect these amounts from your cosigner.

Because of this, it’s important that you and your cosigner keep in contact about the loan, and have a plan in place just in case you experience any financial troubles and need their help.

Ready to Buy Your Next Car?

At the end of the day, make sure you sit down and discuss what it means to be a cosigner with the person you want to do it for you. Make sure they know what their rights are, and how they can be affected.

Once you have a cosigner ready, why not come to Auto Credit Express to find the right dealership to work with? We help people find financing by connecting them with local dealers that are special finance experts.

We’ve been doing this for over 20 years, and we want to help you! Fill out our easy and secure auto loan request form to get the process of getting matched with a dealership near you started right now!