Can a co-signer help me with auto loan income?
A co-signer can be very helpful for first-time car buyers or borrowers with poor credit. However, if you are low on income, a co-signer is not the answer you are looking for. Here’s what co-signers do and other solutions for borrowers who are struggling to meet the requirements for a car loan.
How Co-Signers Help With Auto Loan Approval
Co-signers can help you get approved for a car loan if your credit history is less than perfect, or if you’ve never had credit before. A co-signer gives the lender more security for the loan because they are responsible for the loan balance if you become unable to pay. If your credit score doesn’t meet the requirements, a co-signer could be the ticket to your next car loan.
A co-signer is someone who lends you their good credit score to help you meet credit score requirements.. They are also seen as a relief payor which escalates if you are unable to make payments on the loan. Their income is not added to yours, so a co-signer does not help you meet the income requirements for a car loan.
You must meet the income requirements of an auto lender with your income, even if you have a co-signer. Co-signers also don’t help you make payments every month. A lender is likely to contact a co-signer if you miss a payment, however. For this reason, co-signers have their own income requirements that they must meet since they must prove that they have enough income to pay off the loan if you become unable to do so. However, a co-signer is not required to give you money each month for car payments.
If you need more income for your next car loan, a co-signer can’t help you. Co-signers cannot add their income to yours to meet income requirements – this is where a co-borrower comes in handy.
Co-signer vs co-borrower on auto loans
Confusion about what a co-signer can do can arise from the fact that the terms âco-signerâ and âco-borrowerâ are often used interchangeably, but they mean very different things in the world of auto finance. A co-signer is not a co-borrower, but if you need more income for a car loan application, a co-borrower may be the way to go.
A co-borrower is a person, usually a spouse, who shares responsibility for the vehicle and its loan. You and the other borrower are called co-borrowers, and you are both equally responsible for the payments. Co-borrowers combine income and resources to meet the requirements of an auto lender.
Co-borrowers often take out auto loans together to increase the chances of getting approved for a larger loan balance. Spouses usually do this because they can prove that their income is combined and that they have access to each other’s financial resources. Mortgages, credit cards, auto loans, personal loans are all common types of credit that spouses / partners share because their income can usually be pooled.
Income Requirements For Bad Credit Auto Loans
If your credit score is not good, you may need the help of a subprime lender for a car loan. These third party lenders are registered with special finance dealers and often work in difficult circumstances such as bankruptcy, lack of credit, and repossession of the vehicle. Although they can accept you despite having a lower credit score, subprime lenders still have income requirements that you must meet to qualify for auto financing.
Typically, subprime lenders require that you have a minimum monthly income of around $ 1,500 to $ 2,500, before taxes. Most subprime lenders require this income requirement to be met with a source of income and proven with computer generated check stubs.
If you have additional sources of income, such as a permanent disability or alimony, these could help you meet Debt / Income Requirements (DTI). Subprime lenders generally require that no more than 45% to 50% of your income be absorbed by current expenses and projected vehicle expenses.
If you can meet the requirements of a subprime lender, you may not need a co-signer or co-borrower to qualify for a subprime car loan. However, if your credit score is really worse for wear and tear, a co-signer could still increase your chances of approval.
Connect to a dealership with our help
Here has Auto Express Credit, we know that not all borrowers have the option of bringing a co-signer for the ride looking for a new ride. Having a less than perfect credit score can make things even more difficult in pursuing vehicle financing. That’s why we give bad credit borrowers a hand by connecting them with dealers who are registered with subprime lenders.
Start by filling out our free auto loan application form, and we will search for a special financing broker in your area without obligation. We’ve been connecting borrowers for over two decades and our relationships are coast to coast, so what are you waiting for?