A co-signer is someone who agrees to repay your debt if you default on a loan or miss a payment. If you’re having trouble qualifying for a personal loan or want a better chance of receiving a lower interest rate, applying with a co-signer (if one is available) could help. Show
Co-signers are common when the borrower struggles to get approved for a loan based on their credit score, income or existing debt. The potential downside of getting a personal loan with a co-signer is that you can damage their credit if you miss a payment or default. Before you ask someone to cosign, inform them of the risks and make sure they understand their rights as a co-signer. What is the difference between a co-signer and a co-borrower?Whereas a co-signer is someone who agrees to take financial responsibility for paying off the debt if the primary borrower is unable to keep up with payments, a co-borrower’s name is on the loan. They are expected to make payments from the start. Having a co-signer can help the lender gain confidence that the loan will be repaid. Multiple borrowers are responsible for making payments, versus a single borrower. How a co-signer affects your creditA co-signer has no impact on your credit. Whether you use a co-signer to take out a personal loan or get one on your own, it will have the same initial impact on your credit. A lender will perform a hard credit check, which can ding your credit score by up to five points. That said, getting a co-signer to help you get approved for a personal loan could help you build credit. For example, if you repay your loan on time, it will add positive credit history to your credit reports. As a result, your credit score could increase. Cosigning a loan can affect the co-signer’s credit score—for better or for worse.The loan will be added to the co-signer’s credit history and impact their credit score. Any late or missed payments on the loan will also have an impact on credit score. What you should look for in a co-signerWhen looking for a co-signer for a personal loan, here are some qualities to keep in mind.
Where can you get a personal loan with a co-signerWhen searching for a lender that offers personal loans with a co-signer, you may have trouble finding one. The lenders we reached out to allow you to apply with a co-borrower — someone equally responsible for repaying a loan — and not a co-signer. That said, we found two lenders that allow you to take out a personal loan with a co-signer.
In addition, some lenders only allow you to apply for a personal loan with a co-signer if you’ve been a member with them for a certain time. You may, for example, have better luck with a bank you’ve been with for years than with a company that only offers loan services. When using a co-signer makes senseGetting a loan with a co-signer can be risky, but it can also be beneficial if done correctly. Here are some examples of when using a co-signer would make sense:
“Cosigning or coborrowing a loan is really only something you should do if you’re prepared to pay back the debt,” says Lauren Anastasio, CFP at SoFi. “Being a co-signer or co-borrower for a loved one or business partner can lower their cost of borrowing or even help them obtain a loan they wouldn’t otherwise qualify for, but that only happens because the lender will hold you responsible for the debt if anything goes wrong.” How having a co-signer can affect your relationshipAsking someone to cosign a loan for you is a significant decision. It can put a strain on your relationship with that individual if you face financial challenges down the road and are unable to make your loan payments. It’s important to think carefully about who you will ask to take on such a responsibility. Select someone you have a good relationship with and with whom you can have honest conversations. Ideally, you will pick someone you trust and who trusts you. Because ultimately, both you and the co-signer need to feel good about the agreement and be on the same page about the financial responsibilities involved. Alternatives to cosigningIf you can’t find a willing co-signer or want to avoid the risks associated with cosigning, here are four alternative options to consider. Build your creditIf you don’t mind waiting, improving your credit score before applying could help you qualify for a personal loan without a co-signer. Here are three actions you can take to build or rebuild credit.
Get a secured personal loanSome lenders offer secured personal loans. Unlike an unsecured personal loan, it has an asset attached, such as a bank account or car, which a lender can seize if you don’t repay. This means it is less risky to the lender than an unsecured loan. As a result, you may have an easier time qualifying for one versus a traditional personal loan. Find a bad credit lenderAlthough it can be tough to qualify for a personal loan with a bad credit score on your own, some lenders offer bad credit loans. For example, some online lenders allow applicants to qualify with scores as low as 580. However, a major downside of these loans is that you could receive an interest rate greater than 30 percent. The bottom lineIf you’re having trouble qualifying for a loan on your own, enlisting a co-signer could be a viable option. Before accepting the loan offer, have an honest discussion about the loan amount, terms and repayment plan with your co-signer. If you have contingencies in place, it’s less likely that your relationship will be at risk down the line. Where can I find a cosigner for a loan?Finding a cosigner. Friends - Do you have a friend who's financially responsible and on solid ground income-wise? ... . Extended family - Aunts, uncles, cousins — they're all valid cosigners. ... . Mentors - Personal or professional mentors may also be an option.. Is it possible to find a cosigner online?Where to find cosigners online: The two most used online services, that help you to get co-signers, are Hire A Cosigner, and Cosigner Finder. If you just type in 'Online Cosigner', you will be seeing the name of these two sites popping up.
What to do if I cant find a coFortunately, even if finding a co-signer would be difficult or impossible, you still have options.. Become a Subtenant or Roommate. ... . Use a Co-Signer Service. ... . Try a Peer-to-Peer Lender. ... . Establish or Rebuild Your Credit History.. Can you get someone to cosign?A friend or family member can ask you to cosign just about any type of loan. Student loans, auto loans, home improvement loans, personal loans, and credit card agreements are common. Mortgage loans are too. However, you may not get a cosigner notice if you cosign some types of mortgage loans.
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