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What is a cosigner? When you’re ready to finance a car in St. Louis, you can apply with a cosigner who will agree to pay off the debt if, for whatever reason, you don’t make payments. Cosigners sign loan documentation with borrowers and can be advantageous for those applying for auto loans with bad credit. Read on if you’re wondering how to find a cosigner and why using a cosigner can make a difference!
Simply put, a cosigner makes your loan application more appealing to a lender. Generally, lenders look at the following factors when deciding whether or not to lend money to borrowers:
When you apply for a loan with a cosigner, you’re leveraging your credit score and income, as well as your cosigner’s. If your credit isn’t great or you don’t meet the income requirements — but your cosigner does — you have a better chance of getting approved. Additionally, you may be offered better loan terms, lower interest rates, and lower fees because your cosigner qualifies for them.
Your cosigner can’t be just anyone; it has to be someone you trust and has your best interests at heart. You need an advocate — someone who’s genuinely willing to help you and understands the risks involved. Family and close friends are the best bets. For first-time car buyers, parents and older relatives make great cosigners, because they tend to be experienced borrowers with enough income to take on the loan.
It’s important to keep in mind, however, that while those closest to you will likely make the best advocates, they also need to be financially stable. If a relative or close friend is willing to help but their credit and income aren’t much better than yours, chances are signing with them will do little to improve your chances of approval.
Finally, don’t take it personally if you’re unable to find a willing cosigner. Cosigning is a huge responsibility and there are risks involved for both the primary borrower and cosigner. If you aren’t able to make the loan payments, the cosigner will have to pick up the slack. And if the cosigner can’t make payments, both of your credit scores will be negatively impacted, leaving lasting damage.
When you’re ready to move forward with the next steps, contact us at Green Light Auto Credit, serving Florissant and Herculaneum, MO. We can answer any questions you may have about auto loans and cosigners, such as, “Can I remove a cosigner?”