With the rising delinquencies, one thing is sure, the lenders have become skeptic about lending money to people with credit issues. Now, they are more cautious regarding their investments and need an assurance before lending money to anyone.
Does it mean that a person with low FICO score or zero credit history won't get an auto loan? Of course not. The credit borrower only needs a helping hand in the form of a cosigner to support his loan application. So, let's get enlightened about a cosigner and how he will affect your loan application.
Who is a Cosigner?
A cosigner is a person who signs the loan documents along with the credit borrower. He is obligated to pay for the auto loan if the credit borrower fails to repay the borrowed amount.
The lenders see a cosigner as a guarantee for regular loan payments. That's why; having a cosigner by your side will support your loan application positively.
When do you need a Cosigner?
When a credit borrower has credit issues such as a bad credit history, a zero credit score, repossession in the past, etc., the lender will be reluctant in approving his loan request. He will require a cosigner to provide guarantee of regular monthly payments.
If you fail to make timely payments or decide to avoid them, the cosigner will have to shoulder the responsibility of the loan amount and he will have to pay it to the lender.
What are the Eligibility Criteria for a Cosigner?
A person with a very good credit history and a high FICO score is considered as a strong contender for becoming a cosigner. A friend, a family member, a neighbor, etc. is eligible to become cosigner for your auto loan.
Remember that the cosigner must be enlightened regarding the loan terms and payment schedules. And most importantly, he should support your loan application willingly.
What are the Advantages of having a Cosigner?
· Your loan application will get approved easily as the lender will enjoy the necessary trust and with the help of the cosigner.
· Despite your credit issues, the lender will provide you with low-interest rates because of the cosigner.
· Making timely payments will boost your credit score and put an end to your credit issues.
· The lender will not scrutinize your financial details and raise unnecessary queries.
· Getting auto loan approval becomes easy.
A cosigner is a helping hand that will ensure quick and definite auto loan approval. So, find someone who can become your cosigner and apply for an auto loan without any tension.