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If you’re a first-time car buyer or are struggling to get a loan in St. Louis and don’t know where to turn, a cosigner might be ideal. It’s not for everyone, and you will need to find someone willing to cosign with you. In the future, you may also want to remove a cosigner, depending on the situation. However, it can be a great way to secure the loan you need, especially for an auto loan or some other necessary payment.
When someone cosigns a loan with you, it essentially means they promise to repay if you fail to do so. This is commonly done when the person looking for a loan either doesn’t have a strong enough credit score or high enough income to take one out on their own. When you apply, lenders will evaluate the credit and income details for both the primary borrower and any cosigners. It’s a bit like having a guarantor.
Some people are perfectly able to repay monthly loan installments but unable to take out the loan itself. Using a cosigner’s income and credit scores can give your application a boost if you have not-so-great credit or no credit. If you know you’ll be able to meet your payments but don’t have the required income or credit history, finding a cosigner is ideal. Just make sure you’ll be able to make those payments by putting together a proper budget.
A cosigner needs to have good credit, or at least credit scores meaningfully higher than yours. They’ll also need a high enough income to support your monthly loan payments if you cannot. Someone with a good history of taking out and repaying loans is ideal. Parents are common cosigners. Just keep the risks in mind. The cosigner will continue making payments if you lose your job or need to make other payments.
What does a cosigner do? Does cosigning affect credit score? For the answers to any other questions you might have, simply contact us or visit us today. We’re handily located for St. Charles and Florissant residents.