How a Cosigner Helps You Qualify for a Car Loan

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Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - July 10, 2019

A cosigner can help a bad credit borrower qualify for a car loan by "lending" the borrower their credit. For this reason, a cosigner must have good to excellent credit. A lender that was on the fence about approving you may be more willing with a cosigner on your loan application.

What Is a Cosigner?

A cosigner is someone with good credit, typically a relative or close friend, who agrees to sign your loan contract with you. The role of a cosigner is to act as a backup, in case you run into trouble. The cosigner agrees to not only allow you to use their credit, but to also make payments if you don't.

Because they're expected to pay if you can't, your cosigner must qualify for the loan individually. This means that a lender calculates the cosigner's debt to income and payment to income ratios to ensure they have enough income to make the loan payments.

Additionally, if a cosigner's credit is good enough, you may be able to not only qualify for a loan, but a better interest rate based on the strength of your cosigner's credit.

The Risky Business of Cosigning

Sometimes, it's difficult to find a willing cosigner. If you stop making payments, not only is your cosigner required to make up those missed payments, their credit score may drop as well as yours if payments are made 30 days late or more.

This means cosigning can be a risk for someone because they take a chance and have nothing to show in return unless each payment is made on time and the loan is paid as agreed at its conclusion.

Cosigners don't own or use the vehicle you're buying, even though they signed the contract with you. On top of the fact that they risk harm to their credit and finances if they need to pick up your slack, they can also be taken to court to pay off the lender in the event of repossession.

Looking for a Car Loan without a Cosigner?

If a lender is on the fence about approving you for an auto loan, a cosigner could be just what you need. In fact, bad credit borrowers are sometimes required to have a cosigner in order to get the financing they're looking for. In other cases, the need for a cosigner could mean you're working with the wrong kind of lender.

When you struggle with bad credit, you need a lender that's prepared to handle your unique situation. Not all lenders are capable of working with bad credit, no credit, or bankruptcy car buyers, but CarsDirect knows where to find the ones that are!

We work with a network of special finance dealerships all across the country that have the lending resources to help you get approved for financing – often without a cosigner.

Not only can we point the way toward financing, we can help with your vehicle research, too. Check out our new and used car pages to find out all the vehicle details you need, and then begin your journey toward your next auto loan by filling out our fast, free, and easy car loan request form.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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