Are you planning to buy a big car? Taking a car loan can help you in purchasing the vehicle of your dream. However, some people have a poor credit score which ruins their chances of getting auto loan approval. If you are among them, you don’t have to worry anymore. Anyone who is having a poor credit score can get auto loan approval by reaching out to friends who have good credit scores. You can ask one of them to guarantee your auto loan as a cosigner. Individuals who have cosigners can easily qualify for auto loans.
Cosigners are creditworthy people who agree to share the loan obligations of their friends. You can approach one to increase the chances of getting an auto loan approval. He or she will lend you a helping hand and help you in building your credit score. These are people who guarantee the lenders that borrowers are capable of making regular payments.
What Do You Need To Become A Cosigner?
- Proof of your ability to pay– As a cosigner, you should prove that you have sufficient income to pay the auto loan. This means that your employment status must be stable. Otherwise, the borrower’s loan application may be rejected if the cosigner is unable to prove his/her financial capability.
- Willingness to cosign your friend’s loan– you should be willing to repay the loan if your friend fails. He or she is equally responsible for the amount of money borrowed. The agreement made should be formal; in writing. Verbal agreements are not accepted.
- Your residence and employment– You should have stable employment and residence. This is a prerequisite for loan approval. Lenders are comfortable when working with people who have worked.
Advantages of Using a Cosigner
- Credit score- This will give you a chance of rebuilding your credit score. You can do this by making regular payments to your lender.
- Low interest rate– You will be given an opportunity of having a reliable option. This is the best way of avoiding high interest loans.
- Experience matters-In addition to having a high credit score, he or she can provide you with sound financial advice.
What Happens When the Borrower Miss Payments?
Both the borrower and the cosigner are responsible for the loan. This means that the lender can sue both of them. This is something that can adversely affect your credit score as a cosigner.