If you have poor credit and are looking to purchase a used vehicle, you might feel anxious about your chances of approval. Thankfully, there are a variety of financing options available to improve your chances of approval, with getting a cosigner being a top option. Having a cosigner on your loan can boost your chance of approval and could even help you to get a better interest rate. In this post, we explore what a cosigner is, who can be one, and what cosigners should know before agreeing to cosign an auto loan.
At Autorama, we are one of the largest used car dealerships in Toronto and are committed to helping our customers drive cars they love. We know that getting approved for an auto loan can feel like a stressful process, and we’re here to make your car-buying experience better. Contact a member of our team to explore your used car financing options and get into a vehicle that suits your lifestyle and budget.
See our post, What Do I Need to Finance a Car, for more information on the car buying process.
What is a Cosigner?
Having someone cosign a loan can be a great way to improve your chance of approval and can also help you secure a better rate. But what is a cosigner anyway? A cosigner is someone who agrees to take on the responsibility of someone else’s debt in the event that the borrower defaults on their loan obligations. Essentially, a cosigner is a co-borrower and serves as a form of insurance for the lender. If you have little or no credit, having a cosigner can go a long way toward helping you get approved for a loan and build your credit moving forward.
Who Can Become a Cosigner?
Almost anyone can potentially be a cosigner if they meet the basic requirements of the lender. Becoming a cosigner is not something that should be taken lightly, as if the main borrower defaults, the cosigner will become responsible for the loan. In many cases, prospective borrowers turn to family when looking for a cosigner, as it is an arrangement built on trust.
See our post, Can a Parent Finance a Car for Their Child? If you are looking for more information on how parents can help their children who are looking to purchase a vehicle for the first time.
Can a Cosigner Become the Primary on a Car Loan?
It is important to know that although cosigners are responsible for loan payments if the borrower defaults, they do not own the vehicle legally. If the original borrower no longer wishes to own the vehicle, refinancing or transferring the title to the cosigner could allow a cosigner to become the primary on the loan. In most cases, the cosigner cannot become primary on a car loan, though speaking with your lender is the best way to understand your options.
At Autorama, we know there are many factors to consider when looking to finance a used vehicle. We look forward to making the process of buying your next vehicle easier. Contact a member of our team or apply for used vehicle financing online to get started.