Should I Add a Cosigner or Co-Borrower on My Car Loan?

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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 - May 26, 2020

Deciding whether or not to ask a cosigner or a co-borrower to help you with a car loan depends on your personal credit situation, and the type of help you need to improve your chances of an auto loan approval.

Why You Add Someone to a Car Loan

If you need to add someone to your next car loan, there are few things to consider when deciding which route to take.

Co-borrowers and cosigners can be great resources for bad credit borrowers who are struggling to get approved for an auto loan. In both instances, another person signs on the loan with you, but they offer different kinds of assistance to increase your chances of approval.

Adding a Cosigner

If your poor credit score is the main reason why you’re struggling to get approved for a car loan, a cosigner is likely to be your best bet. A cosigner helps your chances of approval by “lending” their good credit score to you, and by agreeing to make payments if you’re unable to.

A cosigner can be nearly anyone with a good enough credit score and a qualifying income. They don’t make the payments each month, but instead, act as a backup payer to the lender.

You need to qualify for the loan with your own income, while the cosinger’s income also needs to qualify, because they have to make the car payments each month if you can’t.

Usually, a cosigner is a parent, close family member, or friend. A cosigner doesn’t have any ownership rights to the vehicle. While they’ve agreed to sign the loan with you, their name isn't listed on the car’s title.

Something to keep in mind when you’re considering asking someone to cosign an auto loan is that if you start missing payments or have multiple late payments (or the extreme, default on the loan and go through a repossession), this can negatively affect both your and your cosigner’s credit score.

The cosigner’s good credit score is at risk when they cosign a car loan, so provide them with all the information they need to make an educated decision. Be sure to handle the loan responsibly, or both of your credit scores could be negatively impacted. On the flip side, with good-paying behavior you both can improve your credit scores!

Adding a Co-Borrower

If you need (or want) to add more income to your credit application for an auto loan, a co-borrower might be for you.

A co-borrower is almost always a spouse, and they sign the loan documents with you much like a cosigner. They need to qualify with their credit score, although their income is combined with yours. A co-borrower, also called a joint applicant, has their name on the vehicle’s title with yours and is equally responsible for paying the loan.

Since there are two borrowers who are responsible for the loan, there’s less of a chance of default, and a better chance of the loan application being approved.

When you add a co-borrower to a loan, it’s normally done to help meet the income requirements, and both of your incomes are combined to do this. The incomes and finances of both borrowers need to be combined to add a co-borrower to a loan. This is why co-borrowers are almost always spouses or life partners, since they typically share expenses and income.

Similarly to adding a cosigner, both of your and the co-borrower’s credit scores are on the line when you sign together. On-time payments can improve your scores, while missed/late payments can lower your scores.

Ready for Your Next Auto Loan?

If you don’t have the best credit, a lender may require you to add a cosigner to your next car loan. If you’re looking to increase the amount you’re financing or add income to your credit application, a co-borrower is the better route.

Adding someone to a loan lowers your risk as a borrower, and can help you get better loan terms. Adding a cosigner is a common tactic for borrowers who are struggling with credit issues, or who need to start building credit.

Now that you know the details in adding someone else to your auto loan, you can start the car-shopping process. Why not begin here at CarsDirect? Not only can you shop for vehicles online and compare prices on our site, but we help connect poor credit borrowers to special finance dealers that know how to work with unique credit situations.

To get started and get matched to a dealership for free, simply fill out our secure auto loan request form. After you do, we’ll work to connect you with a dealer that has a special finance department in your local area.


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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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