When you don’t have the best credit, you would have come across the terminology, cosigner. According to the lender, when your chances of approval will skyrocket, should you choose to get one for your car loan? Today, you will get to learn everything you need to know about a cosigner:
Why do you need a cosigner?
The first question you will have in mind is why should you get one. For starters, if you don’t meet the minimum requirements of the lender, having a cosigner will help immensely. At the same time, he/she will also be useful in several situations. If you fall under the self-employed category or you don’t have adequate credit, a cosigner will make it easier to get a car loan.
What does a cosigner do?
The role of a cosigner in your car loan is to vouch for you, stating that you will repay the lender in the future. Even though the person signing the documents with you don’t have any right over your vehicle, the auto finance responsibility will fall on the shoulders of the individual.
In other words, they will have to make the payments, if you fail to do so. The advantage for the cosigner is that if you repay the loan on time, it will have a positive impact on the individual’s credit score.
However, if you don’t make the payments on time, the credit score of you and the cosigner will suffer. Also, this individual can’t get out of the contract, unless you refinance the car loan or get a new one.
Minimum requirements
For the cosigner to be eligible in the eyes of the lender, there are certain requirements which the individual should fulfill. For instance, the person vouching for you should have an excellent credit score, to the tune of 700 and above. However, this depends on the lender, so you should get in touch with them. Also, several financial institutions make it mandatory for the cosigner to be present when you are signing the loan documents.
Now that you know everything you need to know about a cosigner find out if you can get one if you can't meet the requirements!