Buying a vehicle can be an intimidating process for someone who’s never been through it before. We as salespeople work hard to make it easy to understand, but there is still much that the general public doesn’t know when it comes to the car buying process.
One of the bigger sources of confusion and lack of understanding has to do with getting a cosigner for a car loan. There are quite a few misconceptions when it comes to this aspect of car buying. Let’s try to add some clarity.
What is a cosigner?
A cosigner is a person who pledges to pay back a loan if you do not. When it comes to buying a vehicle, a cosigner will sign alongside with you for any financing that you require to buy the vehicle. A lender cannot require you to have a cosigner if you qualify on your own.
Why would someone need a cosigner?
Before a lender will finance a vehicle for you, they will look at your credit and financial situation to determine whether or not they will approve you. Some people, because of a combination of lack of credit, poor credit, or a lack of sufficient income are deemed to be too great of a risk for financing approval.
If a lender is unable to offer you a loan based on your own income and credit record, you will need a cosigner to get approved.
Who can be a cosigner?
Anybody with sufficient credit and/or income can be a cosigner. A cosigner can be a spouse, a family member, or a friend.
What does a cosigner need to know?
A cosigner should understand that they’re agreeing to repay the loan on the vehicle just as you are, and will be held financially liable if you are unable to repay the loan.
A cosigner can not only help you get approved for a vehicle loan, but they can also help you get a better interest rate, because the lender will see a qualified cosigner as a reduced risk when it comes to lending money on the vehicle.
So if you’re considering buying a vehicle but you have poor credit, no credit, or no income, if you’re able to find a qualified and willing cosigner, you should be able to obtain financing. And if you have questions about buying a vehicle or about the process, feel free to reach out to me and I’ll do my absolute best to get you approved.