If you’re having trouble getting approval for a car loan then don’t give up just yet, a cosigner may be just what you need. A cosigner is someone who signs the loan agreement alongside you and takes on some of the risk for you, meaning if you default on the loan, then it’s up to them to pay off the loan instead. Do you need a cosigner for a car loan? Not necessarily, but there are many great reasons you may wish to do this, here are some of our picks.
Qualify For Loans
The primary reason you may want to consider a cosigner is to be accepted for a loan that under normal circumstances you would be rejected for, either because you have poor credit score or because you’ve never had a loan before. Either way having a cosigner is a great help to your chances of loan approval, as long as your cosigner has a good credit score themselves of course.
It’s also because of this however that your cosigner needs to be someone who has a lot of trust in you, as if you fail to pay up it could damage them financially both literally and their credit score.
Build/Rebuild Credit
Having a loan is a key step to building or rebuilding credit, and having a cosigner can help make that happen. If you’re a young adult getting your first car then having a loan and a cosigner will set you on the right path to building a good credit score. And if you’ve fallen on hard times and your credit score has suffered then a cosigner can help get you back on the track of rebuilding your credit.
Get Better Rates
There’s a benefit to getting a cosigner even if you’re not in a poor situation financially where one is almost required. Why apply for a good loan when you could get a better one. With a cosigner your prospects look up and you might find that you qualify for better interest rates than you would on your own, and more agreeable terms as well.
A Word of Caution
All of this comes with one major caveat, you should always make sure you can actually pay a loan before you take one out but that goes doubly so if you’ve got a cosigner. Failure to pay that loan ending with all of that debt being dumped on a loved one is one of the worst things you can do to a person and is sure do damage that relationship irrevocably, to make sure that doesn’t happen, make sure your prepared to repay.
That’s all we got! Thanks for reading. If you’re ready for your next car loan with or without a co-signer, we’d love to help with that. Click here to get pre-approved online today.