Using a Co-Borrower on Your Car Loan

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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.


, - March 9, 2020

As a credit-challenged consumer, it can be a process to qualify for the auto loan you need. Missing just one of a lender's requirements can knock you out of the running for a car loan – and none more quickly than an income requirement that misses the mark. But don't give up hope, a co-borrower may be able to help.

What Is a Co-Borrower?

A co-borrower, or co-applicant, is someone who takes out an auto loan with you. The main reason to use a co-borrower is to increase your income so that you're able to meet the lender’s qualifications, as well as help you potentially qualify for a lower interest rate.

In order to do this, your income is combined with that of your co-borrower. However, lenders typically only combine incomes if the co-borrower is your spouse.

Co-applicants can help you gain the advantage you need in order for a lender to approve you for a loan. This may sound similar to another type of help you can get on a loan, called a cosigner, but in reality, the two are very different.

A cosigner's income can't be added to yours, and you remain the only name on the title. A cosigner simply "lends" you their good credit score and agrees to make payments if you fall behind. Think of them as a security blanket that gives lenders more reason to approve you.

Co-borrowers, on the other hand, share ownership of the vehicle with you, and, depending on your qualifications, may even be listed as the primary borrower. Because you’re being considered along with your co-applicant, your combined income is used to meet the income requirements of a lender. However, you both may need to meet the rest of the qualifications individually.

Qualifying for a Car Loan with a Co-Borrower

Technically, you only need a co-borrower's income to help you qualify for a car loan, but this doesn't mean they aren't helpful in other ways as well. For example, even if you can get approved on your own, adding a co-borrower with better credit and a strong income may allow you to qualify for a better vehicle, or better rates and terms.

In order to qualify for a joint auto loan with a co-borrower, you genearlly both need to meet the following requirements:

  • Income – You have to meet the lender's minimum income requirement, as well as their debt to income ratio and payment to income ratio requirements. However, remember that you can combine incomes if the co-borrower is your spouse and meet these income requirements together.
  • Residence – You need to bring in a current utility bill or bank statement in your name with the address listed on the application.
  • Proof of a working phone – A current bill for a landline or contract cell phone for each of you. Prepaid phones aren't typically accepted.
  • Personal references – You need to provide a list of five to eight personal references with names, addresses, phone numbers, and email, with no duplicates.

Bad credit auto loans also require a down payment, usually of at least $1,000 or 10% of the vehicle's selling price, whichever is less.

Ready to Find Your Next Auto Loan?

Whether you're going it alone or you need a co-borrower to help you meet the income requirements, let CarsDirect help you find the dealership in your area that has the lending resources you need.

Simply sit down with your co-borrower and fill out our fast, free, and easy car loan request form. After you do, we'll get to work connecting you to a dealer as soon as possible!

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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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