Who Is A Co-signer?
It’s someone who partners with you for the loan application. A co-signer shares the responsibility of the loan with you. If, for some reason, you can’t make the monthly payments required, it will be their responsibility to pay back the loan for you. But there are conditions to someone being a co-signer. They must have a good credit history.
By good, we mean that their credit score has to be over 700, so it’s actually in the very good to excellent category. Usually, loan applicants ask family members, spouses, or trusted friends to be a co-signer on their loan. If they agree, they are putting their credit at risk for you. It’s a serious matter, and to keep them out of trouble, you need to make all the payments on time.
Co-signer Vs. Co-buyer
While these terms are often used interchangeably, there are a few differences between them. If a bank or lending institution needs you to have a co-buyer for your loan, then the co-buyers income is also included in the loan application. Often, it’s used so that you can meet the application requirements. If the co-buyer on the loan is your spouse, it could also be termed as co-mingling.
On the other hand, if someone agrees to be a co-signer on your loan, their income is not considered to be part of your loan application. You, the applicant, and the co-signer must individually qualify for the lending institution’s requirements and repayment conditions. The only common point between a co-buyer and a co-signer is that they will bear the same liability or responsibility as you to repay the loan.
Loan Minus Co-signer
Here’s what you can do to get a loan without a co-signer.
Check Your Credit Score: Understand your credit score, so you know what monthly options work for you and choose a car as per your budget.
Save: Save a large amount of money for your down payment so that banks can see your commitment, and you can negotiate for a lower interest rate.
Budget For Expenses: Your monthly loan repayment isn’t the only thing to consider. Also, add the car’s gas, insurance, and maintenance into your monthly expenses to see what you can afford before you apply for a loan.
Loan Calculator: After understanding your total budget, find an online loan calculator. Then enter details like your credit situation (good, average or poor), how much you want to spend on a car, and the loan repayment duration. The calculator will then compute weekly, bi-weekly and monthly payment options for you.
Be Honest: You’re allowed to have difficult financial situations. But you need to be honest about them so that the lending institution can offer the right sort of help to you.
More Than A Credit Score: Look for lending institutions that check more than just your credit score to consider loan applications. Some may offer you a loan without a co-signer if you meet minimum criteria like holding a valid driver’s license, being an official citizen of the country, and earning a minimum of $1500 every month. Just ensure that the terms, conditions, and interest rates are agreeable.