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Auto Loan Cosigner

Many people get an auto loan cosigner in order to get a car. An auto loan cosigner is an individual who signs their name to an auto loan agreement. The cosigner agrees to payoff the loan if the cosigner can not do so.

Persons with low incomes, bad credit or no credit histories may need an auto loan cosigner in order to purchase a car. Anybody can be an auto loan cosigner, many dealers and lenders will require a borrower to get a cosigner if they are young, or don’t meet income requirements.

It is very common for parents to cosign auto loans for their children and husbands and wives to cosign auto loans for their spouses. Unmarried couples, business partners and others also often cosign loans in order to purchase cars.

Dangers of being an auto loan cosigner

Becoming an auto loan cosigner can get a person into a lot of trouble. Anyone who cosigns an auto loan agreement should remember that they are obligating themselves to pay off the auto loan if the cosigner can’t.

This means that the lender can come after you if cosign an auto loan and the cosigner doesn’t pay it off. The cosigner could be liable for the whole price of the vehicle if the lender can’t find the vehicle and repossess it. Even if the vehicle gets repossessed the cosigner may still be liable for the difference between the price they get for reselling the vehicle and the amount owed on the loan.

A cosigner will also be liable for paying off the loan if the other party declares bankruptcy. Since a bankruptcy only covers one person, only person’s debts will be erased by it. Becoming an auto loan cosigner could eventually force into bankruptcy to avoid paying off a car they don’t even drive.

Any trouble the cosigner gets including unpaid auto loans and repossessions will be reported to credit bureaus. This means that an auto loan cosigner could have their credit ruined because of a car they don’t drive.

Never become an auto loan cosigner unless you know the other individual is responsible. Always monitor auto loans you’ve cosigned in order to avoid getting into trouble.

Advantages to Auto Loan Cosigners 

 There are many advantages to becoming an auto loan cosigner. Getting an auto loan cosigner can help a person qualify for a much bigger loan than they’d normally get. It can also enable a person to buy a much better car.

This can occur because the dealer or lender will base the auto loan on the cosigner’s income and credit score. Getting an auto loan cosigner with high income and a good credit score can help a person with bad credit or low income purchase a much better car.

Lining up an auto loan cosigner before you go car shopping can help you get a car loan and purchase a much better car. It can also make the car shopping process much easier.