Do you really need a co-signer for a bad credit auto loan?
Bad credit borrowers applying for a car loan may be asked to bring a co-signer on the ride. But you may not always need a co-signer if you work with lenders who specialize in resolving credit issues.
Is a co-signer necessary?
If you are working with an auto lender specializing in car loans for bad credit, then you may not need a co-signer at all. Your credit score is only one piece of the puzzle when it comes to subprime financing.
A bad credit score doesn’t matter so much if you can meet the requirements of a subprime lender, such as:
- Be at least 18 years old
- Have a stable work history
- Proof of a working cell phone or landline
- Proof of residency
- Have a valid driver’s license
- Provide approximately five to eight personal references
- Bring a deposit of $ 1000 or 10% of the vehicle’s selling price
- Have a minimum monthly income of $ 1,500 or $ 2,500 from a single source
If you can meet these criteria, then you might be eligible for a subprime auto loan without the help of a co-signer. If you still want a co-signer to increase your chances of approval, just know that co-signers only lend you their good credit rating – if you are low on income, a co-signer can’t help you in this situation. A the co-borrower can however help since the co-borrowers combine their income to meet the requirements of the lenders.
Bad credit auto loans with a co-signer
A co-signer may not be right for you, or even help you, depending on your credit situation. Co-signers can help many borrowers with credit problems get approved for vehicle financing. By lending you their good credit rating, they help you meet the credit rating requirements of an auto lender.
Your co-signer must also prove that they have sufficient income to cover your loan repayments if you become unable to do so. They are not there to help you with the monthly payments – they are just a back-up payer. In addition, both of your credit scores are affected by any activity on the car loan. If you make your payments on time, it improves their credit; if you miss payments, it reduces their credit.
Co-signers take a big risk in helping someone, therefore, they can be difficult to find. Many first-time or tarnished credit borrowers are required by traditional auto lenders to have a co-signer to qualify for a car loan. But many people are reluctant to risk their good credit, and not everyone has enough disposable income to become a co-signer.
Plus, one co-signer may not be enough to help borrowers with serious scores on their credit reports. Bankrupt borrowers, borrowers with a vehicle repossession, or regular bad credit borrowers, may still not make the reduction for vehicle financing, even with the help of a co-signer. Also, having a co-signer does not guarantee that you are approved for a car loan. If you are a borrower with credit problems and can’t find a co-signer or this is not the right solution for you, then it may be time to consider a subprime auto loan.
Find a subprime lender
Subprime lenders are third parties, so you don’t meet them in person. To get a subprime car loan, you must first find a special finance dealer who has registered with these lenders. Most dealers have loan partners, but special finance dealers work with bad credit lenders who can specifically help consumers with credit problems.
You submit all of your documents to the dealership’s special CFO, who forwards them to their lending partner (s). If you are eligible for financing, you choose a vehicle from the dealership lot based on what you are eligible for.
We want to help you find a special financial dealer. Here has Express auto loan, we have developed a network of dealers from coast to coast who help borrowers cope with credit problems. Complete our free auto loan application form, and we’ll get to work finding a dealer in your area.