Is there any benefit to adding a cosigner to your car loan?

I am trying to get a car loan, but I'm worried that my credit score isn't good enough. Multiple lenders have told me I need a cosigner. Are there any benefits to doing this?

Answer
If you’re worried your credit score isn’t good enough, don’t let it prevent you from shopping around for a car loan! Lenders will let you know if they recommend a cosigner. And if you can find a willing party with a high credit score and steady income, it might be a smart move.
The benefits of adding a cosigner include:
  • Better chance for car loan approval
  • Lower interest rate on the loan
However, if you add a cosigner with lackluster credit or little income, you’re not gaining much—and may not even get approved for the loan.
Since you’re worried about your credit, keep in mind that applying for loans involves lenders pulling your credit report. This counts as a hard inquiry, which is likely to lower your credit score five to 10 points. The good news is you can apply for as many loans as you’d like within 14 days, and your credit will only get dinged once. So, make sure you are being as efficient as possible.
Don’t forget that buying a vehicle with a loan means you’ll have to carry full coverage car insurance per the stipulations of your lender. This can be pricey.
To save the most money, check out the Jerry app. Sign up in just minutes to compare competitive car insurance quotes. Once you make your pick, Jerry will handle all the paperwork and phone calls to buy your new policy. And the average Jerry user saves $879 a year on car insurance.
Eric Schad
Answered on Dec 06, 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.
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