What are the pros and cons of having a cosigner on a car loan?

I applied for a few car loans, and all the lenders said I need a cosigner. I want to get a car, but I'm not sure about having a cosigner. What are the advantages and disadvantages of a cosigner?

Answer
Cosigners are a relatively common requirement for car loans, so don’t stress if a potential lender says you need one. In fact, having a cosigner may be the only way for some people to get approval for a loan.
However, there are a few downsides, so let’s take a look at the pros and cons of having a cosigner on a car loan.
The Pros
  • Allows for loan approval when you normally wouldn’t qualify on your own
  • May help rebuild your credit if your credit score is what’s hindering your loan approval
  • May mean a lower interest rate on the loan, which means you’ll pay less for the car in the long run
The Cons
  • Damage to cosigner’s credit if you fail to pay the loan
  • Legal action and other fees and charges can be levied on the cosigner
  • Damage to your personal relationship if you fail to pay
As you can see, most cons aren’t exactly problematic for you (i.e., the car buyer). However, failure to make on-time payments toward the loan each month can drastically impact your cosigner’s finances—not to mention, ruin your relationship with them.
No one ever intends to miss their car payment, but keep in mind that it’s not just your credit that suffers if you do. For this reason, it’s a big ask—and responsibility—to enlist the help of a cosigner in order to qualify for a car loan.
If you decide to go ahead with a cosigner and get approval from the bank, you will need full coverage car insurance per the stipulations of your loan. Leave the hard work of shopping around for affordable coverage to Jerry. The Jerry app can collect quotes from up to 50 top insurance companies, like Travelers, Nationwide, and Progressive, in seconds! And the average Jerry user saves $879 a year on car insurance.
Eric Schad
Answered on Nov 15, 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

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies
Find insurance savings — it's 100% free