So, you’re ready to go off to college. Congratulations! But what if you need a car to get to campus every day? What if your campus requires a vehicle because of how big it is? An issue many young people struggle with is getting a car loan with little or no credit. One of the best options is to have a reliable person, most of the time a parent or guardian, take out a car loan with you as a cosigner. When the primary borrower (the first person on the loan) has good credit, this can make it easier for you to get an auto loan.
Why is being a cosigner beneficial? Here are two big reasons why:
Helps Build Credit
It’s common for young college students to have no credit. Credit is king in the United States, and being a cosigner on an auto loan will help you establish your own credit over time. Just like signing for your own loan, keeping up good credit habits with a cosigned loan will build your credit history and raise your credit score. This is a great way to learn how credit works - along with the responsibility of making on-time payments. Eventually you'll no longer need a cosigner for a car loan.
It’s important to note that the primary borrower will have to have good credit. They’re ultimately putting their credit score on the line for you so you can establish credit.
There's another advantage to being a cosigner on an auto loan. That's because the primary borrower will typically have a very good credit score due to their previous auto credit and longer credit history. Because auto loan interest rates are based on both these factors, as a cosigner this means you'll have a better interest rate. Going solo on a car loan without any previous auto credit puts you at a disadvantage, and could cost you a lot more in interest charges over the loan term.
Becoming a cosigner on an auto loan can help you establish your credit, especially if you're a college student with little or no credit history.
On the other hand, if you have bad credit and you're worried about getting financed, Auto Credit Express is here to help. We have a nationwide network of car dealerships that have the lenders and know-how to help people in all types of credit situations.
Our service is free, fast, and there's no obligation to buy anything. See what we can do for you by filling out our auto loan request form today.