Does a Cosigner Make Getting a Car Loan Easier?

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Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

, Content Manager - March 9, 2021

Yes, having a cosigner on an auto loan application can make it easier to get approved. But finding a cosigner that can help may prove difficult for some.

How Cosigners Make Approvals Easier

A cosigner is a back-up payer on a loan. For someone to be a cosigner on a car loan, they need to have a good credit score. Typically, they need to have a credit score higher than 660, or at the very least, have one that’s better than yours. They “lend” you their good credit score to help you meet the lender’s requirements, and then promise to repay the auto loan if you can’t.

They back you up on the loan, which makes it easier for you to qualify for financing. Poor credit borrowers are often asked to have a cosigner if their own credit score doesn’t meet the requirement. Your credit history is a major player in getting an auto loan approval with most traditional lenders. But with someone backing you up, and the lender is provided with more security on the loan with the cosigner in tow.

Cosigners are often required for brand new borrowers with limited credit histories, or for borrowers with damaged credit reports.

Who Can Cosign for Me?

If the potential cosigner proves they have the income to repay the loan if you become unable to and they have a good enough credit score to meet the lender’s requirements for qualifying, then they could be your cosigner.

A co-worker, family member, friend, or even someone that lives in a different state could be your cosigner for an auto loan. They can be pretty much anyone – just not your spouse. Adding a spouse to your loan makes it a joint auto loan, and they would become a co-borrower instead. This may help you if your credit score is lacking, but is more for financial purposes than credit score.

Cosigners take on a lot of risks when they agree to help you get a car loan approval. If you start to miss payments, this activity is reported on both of your credit reports. If things don't go well with the car loan and its payment history, the cosigner could lose their good-credit status. And if you default, the lender can come after the cosigner for the loan balance. For these reasons, many people are hesitant to become a cosigner.

CarsDirect Tip: If you need more income to get an auto loan approval – not a better credit score – a co-borrower could do the trick. Your spouse or life partner could apply for the car loan with you and add their income to yours to meet requirements. However, typically both of your credit scores are considered during the approval process, and possibly just the lowest credit score is used to determine eligibility.

Bad Credit Auto Loans Without a Cosigner

Finding a cosigner isn’t always a walk in the park. Many borrowers simply don’t have anyone that’s willing or able to cosign on a car loan.

However, there are lenders willing to assist borrowers with credit issues, limited credit histories, and even tarnished credit. For many bad credit borrowers, subprime auto loans have been the solution. Subprime lenders are signed up with special finance dealerships. Since they specialize in assisting borrowers with tough credit situations, they may not require you to have a cosigner at all.

Instead of just relying on your credit score to make the final loan eligibility decision, they require a number of supporting documents that prove you’re ready to take on a car loan. Most times, subprime lenders require these items to make an approval decision:

  • A valid driver’s license
  • Computer-generated check stubs
  • A down payment
  • A utility bill with current address
  • A recent phone bill in your name
  • A list of personal references

How Subprime Financing Works

Once you have your documents together, the subprime auto loan process usually goes something like this:

  1. Find a special finance dealership
  2. Apply for auto financing with their lending partners
  3. The lender determines your eligibility
  4. If you qualify, you’re told your maximum car payment
  5. Choose a vehicle that fits within the lender’s requirements
  6. Make a down payment (almost always required)
  7. Get proof of full coverage auto insurance
  8. Take delivery of the car

If you’re approved, you can also enjoy the perk of credit repair if you manage the loan well. Since subprime car loans are reported to the credit bureaus, your timely payments can improve your credit score, making it easier for you to get an auto loan approval the next time you need auto financing.

Not Sure Where to Find a Special Finance Dealership?

It’s not very common for dealerships to advertise all of their lending partners, so finding a dealer that has access to bad credit auto lenders can be tough. But here at CarsDirect, we’ve cultivated a coast-to-coast network of special finance dealerships so you don’t have to do the searching.

Get matched to a dealer in your local area after you fill out our car loan request form. It’s completely free, secure, and only takes a few minutes to complete. We’ll get right to work looking for a dealership that’s equipped to assist bad credit borrowers.


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, Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

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