Can you be refused a car loan with a co-signer?
Many borrowers with bad credit are advised to use a co-signer to increase their chances of qualifying for an auto loan. However, having a co-signer doesn’t mean you have a 100% chance of being approved.
Co-signers and auto loans
When you bring in a co-signer for the ride, they provide more security for the loan. A co-signer promises to pay off the loan if you can’t, so a lender is more likely to consider you for financing because there is more than one person willing to pay it back. Plus, choosing a co-signer who has a good loan repayment history can also increase your chances of being eligible.
However, depending on your credit score, the credit score of the co-signer, and all of the other factors that go into financing a vehicle, a co-signer may not be of much help.
A co-signer is not a panacea for all situations. They may ‘loan’ you their good credit rating to help you meet auto loan requirements, but if your credit reports have serious negative ratings or if you are failing in other areas, you might still see yourself. refuse a car loan with a co-signer.
Here are some situations where having a co-signer can still mean being denied a car loan:
Co-signers and income requirements
Income is an important factor in eligibility for an auto loan. If your income does not meet the requirements, your co-signer income is not added to yours – it is considered separately. A co-signer does not help you make car payments each month, so your income is used to determine your eligibility for the auto loan.
If you need more disposable income to qualify for a car loan, then having a co-borrower may be what you need. Or consider cutting back on some monthly expenses to lower your debt-to-income ratio.
Bad Credit Auto Loans Without Co-signer
Co-signers can certainly expand your auto loan options, but they can’t help you in all situations. For borrowers with badly damaged credit, or those who don’t have the luxury of having a co-signer in the first place, there are bad credit loan options to consider.
Dealers Buy here, pay here (BHPH) are known to skip the credit check. Borrowers with bad credit are usually asked to use a co-signer because they have credit problems. Therefore, going to a dealer who can ignore the credit call could mean not needing a co-signer. However, you still have to meet income requirements and likely need a down payment.
Subprime auto lenders are registered with special financing dealers. They specialize in assisting borrowers with unique credit issues, including bankruptcy, situational bad credit, and no credit. Because a subprime lender doesn’t just look at your credit score, a co-signer may not be required to qualify. There are still income, down payment and residency conditions to be met.
Connect to a dealer
Instead of looking for the right lender yourself, let Auto Express Credit handle it. We have built a nationwide network of Special Finance dealerships over the past 20 years. Fill out our free auto loan application form and we’ll search for a dealership in your area who is equipped to help you with many unique credit situations.