Question: My granddaughter really needs a car for college next year, but it’s going to be hard for her to qualify for a good rate on her own. I’m thinking of cosigning the loan for her because my credit is good, but I’m still not sure if I’ll qualify. Can someone on Social Security cosign a loan?
Answer: Being on Social Security won’t necessarily disqualify you from cosigning for a loan, but because Social Security wages can’t typically be garnished—or taken by a lender in cases of unpaid debt—some lenders will be hesitant to approve you as a cosigner.
If you have additional income, like a part-time job, those wages can be garnished so you may be more likely to be approved. This additional income can usually be combined with your Social Security to help you meet the income requirements for a personal loan.
Need to know: If you take out a loan for something like a car, the value of the purchased item is not considered income, so it won’t affect your Social Security income. However, if you take out a cash loan, any of that money that isn’t spent in that same month will count towards your income—which could affect your Social Security benefits.
Why would my wages be garnished if I’m not the primary borrower?
If the primary borrower can’t pay their loan, it’s your responsibility as the cosigner to take over the payments. If you also fail to make payments, the lender could then take legal action.
The lender would likely attempt to garnish the primary borrower’s wages first. However, if that’s unsuccessful—like in cases where the primary borrower doesn’t have a job—the next recourse would be an attempt to garnish your wages.
Can my Social Security wages be garnished for an unpaid loan?
Many federal benefits—including Social Security—can’t easily be garnished. To collect your Social Security benefits, the lender would have to file a lawsuit against you, win the case, and then request the funds from your bank or financial institution.
And even then, if your benefits are direct deposited to your bank account, your bank may be required to protect two months of payments from being garnished. That means the lender would only be able to collect if you have more than two months’ worth of Social Security in your bank account. (However, this protection may not apply if you deposit a physical benefits check into your account each month.)
For example, if you receive $1,200 a month in Social Security benefits, up to $2,400 would be considered protected—so if you had $3,000 in your account, the lender would only be able to collect a maximum of $600.
Because of these regulations protecting how Social Security can be collected, it’s likely that a lender will deny the loan if you don’t have another source of income.
Did you know?While your Social Security typically can’t be garnished for a personal loan, it can be for things like unpaid taxes, child support, or federal student loans.
Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars. Amy has over 10 years of writing and editing experience. After several years as a freelance writer, Amy spent four years as an editing fellow at WikiHow, where she co-authored over 600 articles on topics including car maintenance and home ownership. Since joining Jerry’s editorial team in 2022, Amy has edited over 2,500 articles on car insurance, state driving laws, and car repair and maintenance.
Everett Cook is an award-winning journalist and editor with more than 10 years of experience across a variety of industries. In editing for Jerry, Everett’s mission is to help readers have a better understanding of the costs of owning or leasing a car and to better understand their vehicle in terms of insurance and repairs. Prior to joining Jerry, Everett was an editor for Axios. His previous work has been featured in The New York Times, The Los Angeles Times, The San Francisco Chronicle, The Atlantic, Atlantic Re:think, The Boston Globe, USA Today, and others. He’s also been a freelance writer and editor with experience in SEO, audience building, and long-term content roadmaps. Everett is a proud graduate of the University of Michigan.
