A cosigner is someone who signs an official document (such as a loan or contract) with another person. To cosign involves a legal obligation by the cosigner for the loan amount or other contractual obligations.
If you have checked your credit score, and it’s far from "good," you may need to have a cosigner for your car loan.
If you have a credit score of 550 or below, chances are high that you will require a cosigner for your car loan.
In general, a cosigner is someone who is signing off that they will take over the car loan payments should you default or be unable to pay. This means a cosigner must have good credit themselves for you to be approved for a car loan.
In addition, the cosigner must be able to prove that they could pay for the loan should the need arise. This ensures that the lender's payments will be met.
While finance companies may differ slightly on their requirements for a cosigner, for the most part, getting a cosigner on your lease or loan is simple if they can prove they are qualified for the loan.
Just find someone you know with a good credit score who's willing to be a cosigner. Make sure they understand that if you can't pay a car loan, they are obligated to pay.
Select your cosigner with care, as they will be responsible for the loan should you default and this could impact close relationships. Do your research on the loan before you approach your potential cosigner and be sure you are both clear on your responsibilities.
Once you have your cosigner selected, give their information to your lender, and you'll be well on your way to getting a car loan despite your bad credit score.
Benefits of a cosigner on a car loan
In addition, as you will also be named on the loan, your credit score can benefit and improve as well, meaning you may not need a cosigner again the future.
How do I get a cosigner off a loan?
How do I get around needing a cosigner?
Unfortunately, if you have bad credit, you probably won't be able to get out of needing a cosigner. Even if you get offers for loans, you should be wary of the conditions. Since you have bad credit, if you can get a loan at all, your interest rates will be high.