You might know some of the basics about getting a car loan. Maybe it’s something that interests you. What you may not be sure about is whether two people can co-sign a car loan.
We will talk about that in this article. Having the option of a personal loan with cosigner sharing responsibilities might be more appealing to you than signing up for one of these loans yourself.
What is a Car Loan?
First, let’s briefly talk about car loans. A car loan occurs when you approach a lending entity, most often a credit union or bank. You tell a loan officer or some other individual who grants loans that you need money for a car, and you’d like to borrow it.
This person will likely ask you about your employment situation, and they’ll also check your credit score. If they determine you’re a suitable candidate, they will grant you the loan as a lump sum payment.
You take the money and buy yourself a car. It is then your responsibility to pay back that loan in the designated time, along with interest. You should get a car loan with the lowest interest rate.
What Does Co-Signing Mean?
As for co-signing, that means you and another individual go in on a loan together. You share the responsibility of paying it back during the designated period.
Banks and other lending entities might look more favorably at a situation where you have a cosigner if you have poor credit or no credit. They’ll feel that the other individual can pay back the loan if you can’t come up with the money to do so on time.
Can Two Individuals Put Down Money on a Car?
If you want a car loan but don’t have the best credit, or even if you have no credit, there’s good news. You can get a cosigner to go in on the car loan with you. If this individual has better credit than you, a stable job, or both, you have a much better chance of the lending entity giving you the loan you want.
What Increases Your Chance of Getting the Loan?
If you need a cosigner to get a car loan, the first thing you must do is find one. This is probably not something that you should do with a friend, even if you have a buddy with great credit. More times than not, you’ll do this with a family member.
You have the best chance of getting a loan if the individual co-signing with you has a credit score of at least 650. If they have a higher score than that, you’re on even better footing with the lending entity.
How Do the Payments Work?
One borrower will be expected to make the payments. This person’s identity will be stipulated in the loan contract you’ll sign. If this person fails to make a payment, the lending entity will reach out to the cosigner. They will be expected to pick up the slack.
When the loan’s term ends, if the two individuals have fulfilled their obligation to the lender, they have no further responsibilities regarding the vehicle other than maintaining it, having the proper insurance, etc. The car will belong entirely to the principal borrower.
Should You Do This?
If you have either no credit or less-than-great credit, and you need a car loan, finding someone who can act as a cosigner makes a lot of sense. You’ll need to locate and persuade an individual with a good job and excellent credit to take on this joint responsibility.
If the two of you can fulfill the loan’s obligations, then when you finish making payments, the car is yours. If you accomplish this, you should be thankful to the cosigner who did you this favor. Maybe you’ll think of a nice gift to give them to show your appreciation.