Car Loans Approved For Bad Credit Borrowers With a Cosigner


If you have bad credit but are in need of a quality new or used car, you can still be approved via a bad credit car loan endorsed by a creditworthy cosigner. When you apply with a cosigner by your side, the lender or financial institution will look not only at your credit but the credit of your cosigner when determining if you qualify for funding. With bad credit loans, most all applicants will be approved if their cosigner has good credit, even for new and more expensive cars.

What A Cosigner Does

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A cosigner is a person who agrees to be bound by the lending agreement or loan contract that you sign when you receive a bad credit car loan. If you fail to honor the lending agreement in any fashion, the lender the cosigner will be expected and legally bound to do so. Should the cosigner fail to honor the lending agreement as well, then legal action can be taken against them in order to collect the money that is due to the lender. Agreeing to cosign a loan means entering into a legally binding contract and in doing so, the cosigner is guaranteeing payment to the lender. The cosigner should only sign with you to receive a bad credit car loan if he or she has the ability to repay the lender if something goes wrong on down the road - such as you lose your job or become ill and unable to work - the cosigner will step up to the plate and make your payments on your behalf.

Cosigner Requirements

The cosigner who goes alongside you on your bad credit car loan application should, above all else, have good credit and established payment histories with various accounts that the lender can look at. The cosigner will agree to refrain from exercising his right to the loan if the lender decides to take action in the legal court system against you (should you fail to meet the obligations of the lending contract). This opens up the door for the lender to pursue action against the cosigner as well, including repossessing the vehicle, auctioning it off, and billing the cosigner for any remaining balance, attorney fees, and collection costs.

Effect Of Being A Cosigner On Credit Score

Deciding to cosign a loan does not mean that the credit score of the cosigner will be diminished in any way, unless the borrower makes a late payment or misses a payment altogether. In these instances, the cosigner will likely be notified beforehand and afforded the opportunity to make the missed payment and get the loan into current status. Making the payment will protect the credit rating of the cosigner, although the borrower may see an indication of late payment on his or her credit record.

Being a cosigner on a bad credit car loan is not as risky as with many other types of loans because the car itself is generally referred to as the collateral for the loan, and should sufficiently secure the loan if the borrower does not pay as agreed. Many lenders offer an early cosigner release for those who take out bad credit car loans that will allow the cosigner to be freed from their responsibilities after the borrower makes a pre-determined number of payments, usually six months or less in many cases.


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