How to Get a Cosigner for a Bad Credit Car Loan

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A car loan is a necessity for many vehicle buyers, and if you have bad credit you may not be approved.
When it comes time to purchase a new or used car, your credit score can be the difference between driving away in the car of your dreams or having to purchase another bus pass.
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.
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Check your credit

Before you get a cosigner for a car loan, check your credit. A good credit score can get you a car loan, but if it’s bad, you’ll need a cosigner.
To get your credit score, you have many free options, including CreditKarma and FreeCreditScore.com. In addition, credit card companies such as Capital One’s Credit Wise program offer credit checks for anyone, regardless of whether you have one of their cards. You can also purchase your credit report from any of the major credit bureaus.
On average, the three major credit bureaus, Experian, Equifax, and TransUnion, use the following general FICO ranges to determine if you have good or bad credit:
  • Bad: 550 and below
  • Poor: 550-649
  • Fair: 650-699
  • Good: 700-749
  • Excellent: 750 and above
If you have a credit score of 550 or below, chances are high that you will require a cosigner for your car loan.

What is a cosigner?

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.

How to get a cosigner

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

If you do have a cosigner on your car loan, there can be some additional benefits aside from being approved for the loan. The cosigner’s credit score, if high enough, could also result in lower interest or finance rates on your loan as well as better approval odds on the loan itself.
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.
Remember, if you have bad credit and need a new or used vehicle, do not take the decision of adding a cosigner to your car loan lightly. While there are definitely clear benefits, if you default on your car loan, it could have a serious impact on the cosigner.

FAQs

How do I get a cosigner off a loan?

If you no longer need a cosigner on your loan, you can remove them by contacting your lender and reviewing the conditions of your car loan contract, by refinancing your car loan, or by paying off the 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.
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