Posted on: Apr. 23, 2017 in Car Loans, Credit Score, Money

One way that people with bad credit are able to get the loans they need is to have someone cosign the loan. A cosigner is someone who guarantees that the debt will be repaid. If the borrower fails to pay the debt, the cosigner must do so. There are several scenarios where a cosigner can mean the difference between a loan being approved or not.


When a borrower has bad credit, lenders are less likely to extend a loan. Missed or late payments, or simply no credit history at all, makes it very hard to get a loan. When a cosigner is involved, the lender will look at their credit history in consideration of the loan. However, this will generally only be helpful if you meet the lenders other requirements such as income and debt to income ratio.

A cosigner may also help you if you do not meet the income requirements of the lender. Lenders look for income that is garnishable  - that is, that they can collected by the lender if you don’t pay. If you do not have garnishable income and you have bad credit, you will likely not qualify for a loan. A cosigner who does have garnishable income can help, but they’ll have to meet the other requirements of the lender.

If your income simply isn’t enough to qualify for the loan, a spouse as a cosigner might push you over that threshold. Keep in mind that for this situation, the cosigner must be your spouse for your incomes to be considered together.

Finding a cosigner can be difficult because many are not willing or able to take the risk that the borrower could default. If someone is willing to cosign for you, it’s important that both of you understand that defaulting on the loan could have negative effects on both your credit scores. Enter into such an arrangement carefully and fully armed with knowledge.

If you’re ready for a new car but your credit is keeping you from getting approved, CreditYes can help with our bad credit auto loan program! We can match you with a dealership in your area that will be with you ever step of the way. Our service is fast and free. Fill out our secure online application and get behind the wheel of your next car today!