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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?

avatar
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
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.
More:
New car insurance: What coverage do you need when buying a new car?
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