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How To Get A Personal Loan With Cosigner

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Bad Credit Loans With Cosigners

Some banks, credit unions, and online lenders allow applications to apply and secure a personal loan with a cosigner. If you have poor credit, having a co-signer can open you up to far more opportunities when it comes to what types of lenders you may be able to qualify for, what kinds of interest rates you can get, and what fees you may have to pay.

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Learn More About How To Get A Personal Loan With Cosigner

You should understand that asking someone to be a co-signer on a personal loan is a big ask. It may even be considered a bigger ask than just simply asking the person for a loan directly.

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Can I get a personal loan with a cosigner?

The reason being is that if they decide to lend you some money and you are unable to make regular payments or it ends up taking you a long time to repay the loan, there are no repercussions outside of your interpersonal relationship. Yes, the potential consequences of not paying back a personal loan from a friend or family member have their own set of consequences, however, if you start to fall behind on payments with a lender on a co-signed loan, there may be long-lasting consequences for both you and the lender. Before we get into the details of the pros and cons of a co-signed personal loan, what exactly is a co-signed personal loan and how is it different from a joint personal loan?Co-signed personal loan: A personal loan is a type of financing that can be used for any type of expense that you would like as long as there are no spending restrictions. Personal loans often are used for home improvement projects, medical bills, dental bills, to finance the purchase of a used car, debt consolidation, wedding expenses, funeral costs, an emergency expense like a car or home repairs, and to fund large purchases like new furniture. The idea of a personal loan is to give you the upfront cash you need to cover whatever expense it is that you are looking to cover which is then paid back over time through monthly installments. But, what if you cannot qualify on your own for a personal loan to pay for a home improvement project or an emergency expense? Maybe your credit score is too low to meet the minimum credit requirements or maybe your debt-to-income ratio is too high? Whatever the reason for not being able to qualify for a personal loan on your own, a co-signer can help to get you over the hump.
When you take on a personal loan with a co-signer, you should both be fully aware that both parties are responsible for the loan for the entire loan term. The loan legally belongs to the co-signer just as much as the primary borrower. This means that all activity related to the loan will be on both the credit reports of the primary borrower and co-signer. If the primary borrower is unable to make a payment, then the lender may ask the co-signer to make the payment. If the co-signer is unable, then both credit reports will be affected. This is why if you are planning to ask a spouse, partner, family member, or friend to co-sign a personal loan or if you are asked to cosign on someone else's loan, you should be fully aware of all of the risks involved. Here are a few basic pros and cons of co-signed personal loans.Pros:
The primary borrower can build credit: If you have little to no credit or poor credit, then taking out a personal loan with the help of a co-signer can help to build your credit score or help to establish a credit history where there is none. However, keep in mind that the opposite can be true. Missed or late payments can bring down the credit score of both the primary borrower and the co-signer.
Lower interest rates: Even if you can qualify for a personal loan on your own, if you have bad credit, interest rates can be as high as 36%. If you have a cosigner for a personal loan that has good or excellent credit, chances are you may qualify for much lower interest rates. A lower interest rate means that the cost of repaying the loan will be less and that the monthly payments may be more comfortable for the budget of the primary borrower.
Higher loan amounts: When a lender reviews a loan application that contains a co-signer with good or excellent credit, they are more likely to approve loans for higher loan amounts. Depending on the lender, maximum loan amounts can be $50,000 or $100,000. If you have bad or even fair credit, your best chance to qualify for those higher loan amounts is to bring on a cosigner.Cons:
Impacts two credit scores: Any late or missed payments or if the loan goes into default, both the credit score of the primary borrower and the co-signer could take a serious hit. This could have long-lasting impacts on the financial futures of both parties and prevent them from acquiring new credit in the future.
The debt limits borrowing power for both people: When either the primary borrower or the co-signer apply for new credit in the future, as long as the loan is still outstanding, the loan amount will affect the debt-to-income ratio of each party. This may limit the amount of new credit either party can take out in the future.
The potential strain on the relationship: Friendships, marriages, and family relationships can become complicated when it comes to matters of money. If the primary borrower is unable to make the loan payments for any reason, it puts the co-signer at risk. If the co-signer then needs to step up to make payments on the primary borrower's behalf to avoid causing damage to their credit score, they may get upset. These kinds of conflicts can cause strain on interpersonal relationships.

Joint loans: A joint loan is a loan you get with another person who shares ownership of the loan and who is equally responsible for repaying the loan. This may sound exactly like a co-signer, however, there are some subtle differences that distinguish a co-borrower from a co-signer. For example, a co-borrower has a right to the funds, they help make payments on the loan, and they have their name on the loan agreement. A co-signer on the other hand is someone who has no right to the money and only lends their good credit by signing on the loan as a co-signer. Their name will not appear anywhere else on the loan agreement. The main thing that a co-borrower and a co-signer have in common is that they are both responsible for paying on the loan if the primary borrower is unable, however, a co-borrower may still be responsible for a minimum of 50% of the monthly payment as part of their role as a co-borrower. Here are some basic pros and cons of joint loans.

Pros:

Improved chances of qualifying and lower rates: If you have a higher debt-to-income ratio or a low credit score, having a co-borrower with a higher income and a stronger credit score may improve your chances of qualifying for the loan and for qualifying for lower interest rates.

Shared monthly payments: Having a co-borrower can decrease the amount you need to pay each month if you both agree to cover 50% of the monthly payment on the loan.

Cons:

Someone may need to cover the entire monthly payment: If for any reason your co-borrower or yourself are unable to make their share of the monthly payments, then the other person will have to compensate to prevent any damage to both credit scores.

Complicates your relationship: If things start to go bad in terms of the loan or someone not being able to keep up to their end of the bargain, then relationships can take on some serious damage.

So, yes, getting a loan with a co-signer is something that you can do and there are many benefits to doing so. It is just important that all parties involved truly understand what is at stake and what could potentially go wrong if they are part of a co-signed personal loan.

What is cosigning a loan?

Someday you may be approached by a child, friend, spouse, sibling, cousin, or some other family member and asked if you can cosign a loan for them. This may be especially true if you have a long credit history, a strong income, and a high credit score. If you are approached and asked to be a co-signer on a loan, gather as much information from the primary borrower as possible. What is the loan going to be used for? How much is the loan going to be? How long of a loan are they going to need to have comfortable monthly payments? These types of questions are going to help you gauge what exactly your level of commitment is going to be. There is a big difference between co-signing on a 30-year mortgage versus co-signing on a $10,000, 5-year personal loan. Also, you do not have to answer right away. Tell them you need some time to think about it and you will get back to them. It is during this time that you should weigh the potential risks and become fully educated on the consequences and potential impacts on your own finances. So what is it mean to cosign a loan, what is a co-signer, and what are the potential risks to co-signing a loan?A co-signer is someone who signs onto a loan application with a primary borrower who is in need of some assistance to qualify for a loan or to qualify for a lower interest rate. By signing onto the loan, the co-signer becomes legally responsible for the loan amount should the borrower fall behind on payments. There are many risks associated with becoming a co-signer so you should not make this decision lightly. Also, do not feel pressured to overcommit to a large loan amount or a home mortgage that could greatly impact your credit and affect your chances of taking on new credit in the future. For example, if you are looking to purchase your own home in the near future, then you may want to avoid taking on any new lines of credit, even as a co-signer. Being a co-signer on a loan may have some effect on your credit as if you took out the loan on your own. Additionally, your debt-to-income ratio will increase as well. Remember, you can always say no, and if that person does not respect your decision, then you may have avoided a potentially hazardous arrangement altogether. Here are some examples of what kind of risks co-signing a loan may expose you to.You could become responsible for the entire debt: If for any reason the primary borrower becomes unable to make the monthly payments, the co-signer will be held responsible. Even if the primary borrower, there is still a chance that you may have to cover the debt. Most likely, in the event of the death of the primary borrower, the estate will cover the debt. However, if the estate is not large enough to pay the loan, then the co-signer may still have to pay off the remaining loan balance.Potential impact on your credit score: When you co-sign on a loan, the loan and the payment history will become part of your credit report. Any late or missed payments become your problem. Also, the initial hard inquiry credit check and the increase of your overall debt amount could have a small negative impact on your credit score. However, as the loan payments are made on time, a credit score should correct itself and maybe even begin to increase.Decreases your ability to borrow in the future: Having a debt like a personal loan on your credit report may increase your debt-to-income ratio and make it harder for you to qualify for future lines of credit. If you are planning to buy a home soon, then you may want to reconsider accepting the responsibility of being a co-signer.
You could be sued: If the loan reaches default, a lender has just as much right to seek a judgment against you as they do the primary borrower. There are many negative consequences to having a judgment on your credit history that can have a lasting impact far into the future.
Removing yourself from the loan is difficult: If you are willing to cosign a loan, you better make sure you are willing to be the co-signer for the entire loan amount and the entire loan duration. Getting yourself removed from a loan as the co-signer can be a complicated process that is difficult to do.
Interpersonal conflict: Anytime money is involved, it has a tendency to divide people and bring out their ugly sides. If something should happen to go south with the loan, there is always the potential for real damage to any relationship, no matter how strong.Even though there are all these risks associated with co-signing a loan, there are some potential benefits to your credit if you sign onto a loan. If the primary borrower makes all the monthly payments on time and in full, then your payment history will reflect that with no effort on your part. Also, if you co-sign a personal loan, it could help improve your credit mix a little bit which could potentially give your credit score a slight increase. That being said, there is by far more risk than reward to co-signing a loan and you should weigh all those risks before committing.

What credit score does a cosigner need for a personal loan?

Most lenders may not have specific credit score requirements, however, for the greatest impact on your chances of qualifying for a personal loan and to have access to lower interest rates, you may want to find a co-signer who has a minimum credit score of 670. However, keep in mind that the better the credit score is of the co-signer, the more favorable the terms.

Best Personal Loans for Cosigners in 2022:

Ok, so you have found a co-signer, explained your entire situation to them and they are fully aware of all the risks involved. Even after they consider all the potential consequences of being a co-signer they are 100% onboard and willing to help you qualify for the loan you need. Now you need to find the right lender for you. Remember, not all lenders allow you to add a co-signer onto a personal loan. That is why not only will you want to explore all the different loan amounts and loan options that lenders have available, you need to make sure that they accept loan applications with a co-signer in the first place. We have taken the liberty to do some of that lender screening on your behalf. Below is a list containing some of the most trusted online lenders who happen to provide some of the best personal loans for cosigners in 2022.

Lightstream

Top pick for: home improvement loansQualifications: LightStream is an online lender that does not officially allow the use of co-signers for personal loans, however, they do allow joint applications. Someone seeking a personal loan between $5,000 and $100,000 with a loan repayment period of up to 12-years can have a co-borrower added to the application who has a minimum credit score of 660 and a minimum income of $50,000.Pros:
No origination fees, prepayment penalties, or late fees
Lower APRs when compared to other lenders
Fast loan approval and account funding
Larger loans of up to $100,000 for those who qualify
Long-term loans of up to 12-years are available
Allows the use of a co-borrowerCons:
No prequalification process is available on the LightStream websites
No due date flexibility
Maybe some limitations on how you can use your loan
Does not allow the use of a co-signer

Why choose: If you have a credit score below 660 but you have a co-borrower who meets all of the minimum requirements for qualifying for a LightStream personal loan, then you are encouraged to apply. Also, if you are looking for larger loans with some of the lowest interest rates available on the lending market, then LightStream may be able to offer what it is you are looking for.

SoFi

Top pick for: large loan amounts
Qualifications: SoFi also does not allow co-signers on personal loans, however, they do allow co-borrowers. Co-borrowers should have a minimum credit score of 680 and a minimum income of $50,000 for personal loan amounts between $5,000 and $100,000.
Pros:
Loan repayment periods are available from 2 to 7-years
No fees
Competitive interest rates
Excellent online/digital experience.
Cons:
Longer approval time compared to other lendersWhy choose: SoFi is a good lender for people who are looking for long-term loans and may also be interested in some free financial planning services and investing advice.

Prosper

Top pick for: peer-to-peer loans $40,000 and less
Qualifications: Prosper does not allow co-signers, however, it does allow co-borrowers for personal loans for amounts between $2,000 and $40,000. Loans are available with 3 and 5-year terms.
Pros:
Lower minimum credit score requirements
Some flexibility when it comes to changing payment due dates
Offers a prequalification tool on the Prosper websiteCons:
Charges origination and late fees
Higher APRs

Why choose: If you are a bad credit borrower looking for a smaller amount of money to cover smaller home improvement projects or other expenses., then Prosper may be a lender you may want to consider.

Upgrade

Top pick for: bad credit loans
Qualifications: Upgrade does accept co-signers with a credit score higher than 560 and for loan amounts between $1,000 and $50,000. Loan terms can span anywhere from 3 to 7-years.
Pros:
Lower minimum loan amounts available for smaller emergency expenses
Lower credit score minimum requirements
No early pay-off penalty
Allows joint applications for easier approval and/or lower interest ratesCons:
Charges an origination fee between 2.9% and 8%
The maximum loan amount is $50,000
Higher APRs, especially for subprime borrowers

Why choose: Upgrade is a good lender for someone who has bad credit and their co-signer only has fair credit. Upgrade has some of the lowest credit score minimum requirements on the lending market.

Can you get a personal loan with bad credit if you have a cosigner?

Yes, if you have bad credit, then not only is trying to secure a co-signer a good idea, it may be necessary if you do not meet the minimum requirements to obtain a personal loan on your own. Many lenders require a minimum credit score of at least 600 to even be considered for a personal loan. On top of that, the lender may even have minimum salary requirements as well. If you do not meet the minimum income requirements or you have a score below 600, you have two options. First, you could always go to an online lender like Upgrade that has no minimum income requirements and a minimum credit score requirement of 560. Second, you can try to find a co-signer who is willing to help you qualify for a personal loan. Remember, asking someone to be a co-signer on your personal loan has many implications and potential risks. If you get turned down by the person you ask to be your co-signer, it may be best that you respect their decision.

Is it better to apply for a loan with a cosigner?

Yes, when it comes to obtaining higher loan amounts, locking in lower interest rates, and easier qualification, it is almost always better to apply for a loan with a co-signer. Even if you could qualify for the loan on your own with a fair credit score, having a co-signer with a good or excellent credit score can help you to lock in an interest rate that is lower than what you may qualify for on your own.

Can I cosign with a 650 credit score?

Although some lenders may not have an official credit score minimum requirement for co-signers on personal loans, it is a general rule that most lenders may want to see a credit score above 670. There may be a few exceptions to this rule, and really it all depends on the lender, the credit and income of the primary borrower, and the income of the potential co-signer. If everything else looks good to the lender, they may be willing to overlook a co-signer with a credit score lower than 670. Also, some lenders may have lower minimum credit score requirements for their borrowers which also by default lowers their credit score requirements for co-signers. But again, you will need to ask the lender directly for specifics.

Who gets the credit on a co-signed loan?

When someone signs on to a personal loan as a co-signer, they not only take on all the risk, they take on any potential award as well. If all the payments are made on time and in full, then the co-signer may see some increase to their credit score due to the perfect payment history and the loan adding to someone's credit mix.

What does a co-signer's credit have to be?

If you have bad credit, then you really should be looking for a co-signer with a good or excellent credit score. The better the credit score the better the chances are to qualify for the loan and the lower the interest rates may be. Ideally, you may want to find a co-signer that has a minimum credit score of 670.

Will being a cosigner hurt my credit?

Yes, being a co-signer can hurt your credit, but the damage done could be minimal and only temporary if all the monthly payments are made on time. As a co-signer, you take on all of these same risks and rewards as the primary borrower when you take on a new loan. A new line of credit always comes with a hard inquiry credit check and it adds to your overall debt. Both of these things can negatively impact your credit score. As the loan ages and more and more on-time payments are added to the payment history, then your credit score may correct itself and it could even begin to increase.

Are there companies that will cosign for you?

Companies that act as a co-signer may come in handy if you need a cosigner to rent a home or an apartment, however, for personal loans, there seem to be no companies that offer this type of service.

What happens if you cosign a loan and the other person doesn't pay?

If you are a co-signer on a loan and the primary borrower does not pay, then you are responsible for the loan. You may want to monitor the loan to make sure payments are being met because a lender is not required to notify a co-signer if the payments are late or if the account is delinquent. Often, you may not even find out the primary borrower is behind on the payments until you see the impact on your credit report. This is why it is important that you have a good relationship with the primary borrower and that you keep all lines of communication open.

Do I need proof of income if I have a cosigner?

If you have a willing co-signer, a lender may not need to see your proof of income as long as the co-signers proof of income is substantial enough to appease the lender. However, you may want to show proof of income if it can help you get a lower interest rate. In some cases, the lender may require proof of income from both the primary borrower and the cosigner.

How can I get a personal loan without a cosigner?

If you cannot qualify for a loan on your own and you cannot find a co-signer, then you may want to explore secured loan options. Secured loan options use an asset as collateral to secure the loan. The asset could be your home, vehicle, retirement savings accounts, or something valuable like gold, silver, and/or jewelry.

What is needed to cosign a loan?

Co-signer requirements vary by lender, however, here are some of the common items that a lender may request from a potential co-signer. A lender may request documents that verify a co-signers address, identity, income, employment, and other expenses and assets.

Does Cosigning affect my ability to get a loan?

Yes, anytime you cosign for a loan, the loan amount can count against your debt-to-income ratio. The higher your debt-to-income ratio, the less of a chance you may be able to qualify for a loan depending on the amount you are requesting. If you co-sign on a loan, it does not mean you will automatically be denied for all other loans, it just means that you may not be able to qualify for personal loans for the largest amounts.

How do I protect myself as a cosigner?

The biggest way to protect yourself as a co-signer is to have good communication with the primary borrower. Make sure they can come to you before there is a problem if they are unable to pay. You may need to cover the loan for a month or two while they get things in order. It is much easier to cover for a primary borrower for a few months than have them be too scared to speak with you sending the loan into default. You can always float them a small loan on the side to help them through a rough patch because once a loan goes into default, the damage is already done.

Does cosigning help APR?

Yes, if a personal loan comes with a co-signer with good or excellent credit, there is a chance that the APR will be lower than a personal loan with no cosigner.

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