How do cosigners work on a car loan?

I applied for a car loan at my local credit union, but they said I need a cosigner for approval. What does this mean? How does it work?

Answer
Needing a cosigner for a car loan is a common occurrence, so don’t stress. The concept is simple.
A cosigner is a person with a steady income and good credit who signs with you on your loan. By signing the loan, they agree to make payments on your behalf should you default or otherwise be unable to pay the car loan each month.
An ideal cosigner should also have a steady income and above-average credit. By having both of these characteristics, the lender is more at ease and you may even get a lower interest rate. However, make sure the cosigner is someone you trust and vice versa. If you fail to pay, not only will it hurt your credit score, but it will hurt that of the cosigner as well.
Once you’ve secured the loan, remember that you will also need to get full coverage car insurance, as lenders require it. To compare quotes from up to 50 insurers, use the Jerry app. Sign up in minutes, and once you make your choice, Jerry will take care of all the paperwork.
Eric Schad
Answered on Oct 21, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
thumb-up

Did this answer help you?

Ask us a question by email and we will respond within a few days.
thumb-up

Have a different question?

You can meet us at our office and discuss the details of your question.
Let Jerry’s experts help you find savings on your car insurance!
No long forms or spam · Get quotes from 40+ carriers
Find insurance savings (100% Free)
rating primary
4.7/5 Rating on App Store