A cosigner is particularly useful when a consumer has little credit or bad credit. If someone is rejected when getting a car loan for having a poor credit score, they can add a co-signer, generally a parent or relative, to the process. The creditors will then run the cosigner’s credit score instead of the consumers. If the cosigner has good credit than the consumer with poor credit or no credit will be able to get a car loan.
What’s positive about cosigners is that the terms and conditions will be based purely on their credit. So even if the consumer has no credit or poor credit, they can still get competitive loan terms and interest rates from the dealership.
However, having a cosigner can also be a tricky business. If the consumer defaults a loan, it becomes the cosigner’s responsibility to pay it off. By signing their name beside yours, they’re taking a very large risk. If your loan should become delinquent, not only will it tarnish your credit score – it will affect theirs as well. Though it may seem like a good idea to have a cosigner to help get competitive terms and rates if you have little or bad credit, consider very hard whether you’re willing to take on the responsibility of another person’s credit before you let them sign on the dotted line. Failing to make your payments will lead both of you down a bad path.
Always make sure to thoroughly research your loan before either you or your cosigner decides to go with that lender. A quality website like NationalCarAndLoan.com may be able to help you find a great auto loan with reasonable terms and conditions even if you have little or bad credit without you needing a cosigner! So make sure to explore all your options before choosing one!