Do you dream of a big car? Is your credit score low? If so, do not let the lender ruin your chances of getting easy auto loan approval. You should try reaching out to a friend with a good credit score and ask him to cosign your auto loan. Applying with a cosigner will help you qualify for the loan easily.
Who is a Cosigner?
A cosigner is a credit worthy person who agrees to share your loan obligation. If you are a first-time car buyer or a college student, with zero credit score, getting the help of a cosigner makes a lot of sense. It is because he will lend a helping hand to you as well as help you to build a good credit score.
A cosigner increases the chances of getting easy auto loan approval. His credit score adds weight to your auto loan application. Basically, a cosigner guarantees the lender that you will make regular payments. If you are unable to do so, the cosigner has to assume the responsibility of the payments.
What are the Requirements for becoming a Cosigner?
1) Willingness to cosign the auto loan
The cosigner must be willing to make the payments, if you miss them. It is because he is equally responsible for them. Remember that the agreement should be in writing, as the lenders do not accept verbal agreement from the cosigner.
2) Proof of cosigner’s ability to pay
A cosigner must prove that he earns a sufficient income to cover the amount of the auto loan. He must have a stable employment status. If he fails to prove his financial capability, the lender may reject the auto loan application.
3) Cosigner’s employment and residence
Stability in employment and residence of the cosigner is prerequisite for easy auto loan approval. The lenders are in favor of those cosigners who have lived at one address and have worked in their present job for a long period of time.
What are the Advantages of having a Cosigner?
1) Low interest rates
A cosigner not only gives you an opportunity to have a reliable transportation option but also saves you from high rate of interest.
2) Credit Score
A cosigner will allow you to obtain easy auto loan approval and help you build your credit score. In order to build your credit score, you must make regular payments to the lender.
3) Experience matters
A cosigner should be a person with a good credit score. He can also provide you with valuable financial advice. So you will not only receive better interest rates but also a sound financial advice from your cosigner.
What Happens If You Miss The Payments?
· If you miss the payments, do not think that the lender cannot sue the cosigner. As the cosigner is responsible for the auto loan, the lender will not shy away from suing him.
· When someone agrees to be your cosigner, he puts his credit score at risk. And, if you fail to make the payments, it hurts his score as well.
When a cosigner agrees to sign the auto loan application, he accepts the equal responsibility to make regular payments. So don’t risk the cosigner’s credit score by avoiding the payments. Remember that when you make regular payments to the lender, it allows you to drive your dream car and also wins your cosigner’s trust.