Why do I need a co-signer for a car loan?

My wife says she needs to co-sign on my car loan, but I don't understand why. What are the reasons to get a co-signer?

Answer
You may need to get a co-signer if you have bad credit or if you don’t meet a lender’s income requirements.
Co-signers on car loans can be used to boost your credit if both you and your co-signer separately meet the minimum income and debt-to-income (DTI) ratio requirements set by your lender. This usually means that you’ll both need:
  • A minimum income of $1,500 to $2,000 per month before taxes
  • A DTI ratio of less than 45-50%
If you don’t meet your lender’s income requirements, your spouse can co-sign to get you approved. The incomes of two married people can be combined into one, so you won’t have to individually meet the income and DTI requirements.
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Liz Jenson
Answered on Nov 11, 2021
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