Cosigning Pros and Cons
If you have bad credit, getting accepted for a loan can prove to be difficult. One way to improve your chances is to get a cosigner. What are the benefits of cosigning a car with someone? Are there any drawbacks? Cosigning isn’t for everyone, so let’s explore the pros and cons of cosigning a vehicle.
Advantages of Cosigning
- Makes securing a loan easier for someone with bad credit
- Borrowers typically receive a lower interest rate
- Potential to improve credit for both signers
Disadvantages of Cosigning
- Credit for both borrowers is on the line
- Typically, the person with the higher credit score takes the burden of paying to maintain credit if the other fails or refuses to pay
- As money is involved, if one person tries to take advantage of the other, any relationship between the two could be ruined if things go bad
As you can see, cosigning is something that should not be taken lightly. If you think you need a cosigner, do it with someone you fully trust. For example, a parent may cosign with their son or daughter to help them as they purchase their first car. Overall, you should feel confident that the other signer will contribute to the loan every month when it comes due.
[ READ MORE: How Your Payment History Impacts Your Credit ]
Looking for more tips on buying a car? Check out the Broadway Credit blog for more posts regarding financing and credit score. Ready to buy a vehicle? Need assistance with the process? Contact our team here at Broadway Credit and we will be happy to help you in any way we can.