How Does A Co-applicant Help Get Me Approved For A Car Loan

If your credit is so bad that you can’t get a car loan on your own, then a co-applicant may be the way to go. A co-applicant on a loan shares just as much responsibility as the applicant. If the applicant doesn’t make the payments then the co-applicant is responsible for paying back the loan. They share the legal responsibility to pay the loan back and also share the benefits of the property.

The co-applicant must have good credit to get the loan approved. He or she can make the difference of getting the loan approved or not. The co-signer shares ownership of the vehicle and shares the responsibility of paying the loan back.

Co-applicant and Co-signer

The difference between a co-applicant and a co-signer can usually be found in the small print on a contract. Each State has their own laws on how a contract must be worded. They are both liable and responsible for paying the loan back. Both are closely inspected for their credit worthiness and ability to pay back the loan. Both parties of the loan should carry insurance in the event of death or the inability to repay the loan.

Faulty Thinking

Since the terms co-applicant and co-signer are often interchanged, it is easy for an applicant to believe that a co-signer who acts as a co-applicant will help improve the applicants credit score. It normally does not help, because the co-applicant is responsible for the loan if the applicant doesn’t make the payments. The co-applicant puts their credit on the line in the event the applicant defaults on the loan. The loan and payment history goes on record for the co-applicate with the better credit history.

Your co-signer will want to know your personal financial situation before he or she signs the loan for you. They will want to know what your intentions are if something happens and you can’t make the payments. Most people know that the majority of people who have co-signed car loans, have ended having to pay for the loan, therefore they will want to make sure they protect their interest.

Picking someone to co-sign a car loan for you should not be taken lightly. You are asking your friend or family member to take a big risk by co-signing for your car. If you go this route make sure that you can make the payments, and not leave your co-signer ending up having to pay for your car. The lender can and will go after your co-signer in the event you stop making the payments as agreed upon.