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How is a cosigner responsible for a car loan?
My representative at the bank told me that I'd need a cosigner to get approved for my car loan. What does a cosigner do? Are they responsible for the loan itself?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Don’t sweat it if you need a cosigner for
car loan
approval. Many lenders require a cosigner for a variety of applicants. You’re right, though—a cosigner is another party who is responsible for your loan if you default or otherwise fail to make payments. A cosigner needs to have great credit and steady income that can support the car loan payment each month in the event that you can no longer pay. Parents, spouses, or family members are ideal cosigners, since you’ve built up a trusting relationship with them over time.
It’s recommended that you do not choose a friend as a cosigner unless you have no other option; money issues can easily sour a friendship.
If you sign onto the loan with a cosigner but your income and credit increase enough that you’ll no longer need them, you can always request a cosigner release form later, which absolves the cosigner of their financial responsibilities.
And if you’re ever looking for ways to free up extra cash for your car loan payments, remember that cheaper car insurance is just clicks away. Just download the
Jerry
app to compare competitive quotes from up to 50 top insurance providers.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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