Why Would I Need a Cosigner to Get a Car Loan?

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Contributing Writer

David Topham is an Automotive Content Manager for Internet Brands. He works as the lead editor for CarsDirect and Auto Credit Express, and contributes to those sites alongside other Internet Brands' properties like The Car Connection. He was born and raised in Michigan and is a graduate of Michigan State University.


, Contributing Writer - February 28, 2018

When a lender won't offer a borrower a car loan unless they get a cosigner, it typically means they don't have the credit or the income to qualify on their own.

A Cosigner for a Car Loan

When the situation calls for it, it's not uncommon for lenders to tell borrowers they need to find a cosigner to qualify for an auto loan.

A cosigner can be a friend, spouse, or family member who signs the loan along with the primary borrower. This legally adds the cosigner to the loan, requiring them to pay it back in the event the primary borrower cannot. In exchange for adding them to the loan, the cosigner's signature guarantees the loan will be paid back, making a lender more willing to approve an applicant.

The two most common reasons why a lender asks a borrower to get a cosigner are to boost their credit or their income.

A Cosigner to Boost Credit

Lenders are more hesitant to give loans to borrowers with limited to no credit experience. The lack of a strong credit history doesn't give them confidence to approve a loan, especially for something as expensive as a car.

However, a cosigner with good credit can help these borrowers get approved. A cosigner gives the primary borrower's application a needed boost, as this arrangement essentially allows them to "borrow" their cosigner's strong credit history.

When a cosigner is needed to boost credit, both the primary borrower and the cosigner have to meet the lender's income requirements individually. Typically, these include a minimum income of $1,500 to $2,000 a month before taxes and a debt-to-income (DTI) ratio, including the car loan, of 45 to 50 percent or lower. The DTI ratio is the percentage of monthly income dedicated to regular bills and helps lenders get a feel for an applicant's disposable income.

A Cosigner to Enhance Income

In cases where the primary borrower doesn't meet the lender's income requirements, having a spouse cosign the loan can help them get approved.

The incomes of two married individuals can be combined (co-mingled) in a cosigned loan. This means they can meet the lender's minimum income and DTI requirements together instead of having to individually qualify. Note that incomes can't be co-mingled with any cosigner that isn't a spouse.

The Bottom Line

For car buyers with bad credit, no credit, or who don't meet the income requirements, a cosigner can be the difference in qualifying for a loan. Borrowers should understand the risks involved before asking someone to cosign for them.

If you're looking for a car loan and are dealing with imperfect credit, CarsDirect wants to help you find financing – possibly even if you don't have a cosigner. We work with a nationwide network of car dealerships that specialize in helping consumers dealing with credit issues. We'll work to match you with a local dealer if you get started by submitting our secure auto loan request form online.

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, Contributing Writer

David Topham is an Automotive Content Manager for Internet Brands. He works as the lead editor for CarsDirect and Auto Credit Express, and contributes to those sites alongside other Internet Brands' properties like The Car Connection. He was born and raised in Michigan and is a graduate of Michigan State University.


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