Bad Credit Car Loans : Cosigner Or No Cosigner?

You haveve probably heard that if you want to get a car loan and you have bad credit

, then you need to get a co-signer. This statement is both a half truth and a half myth. What kind of loan can you get without a co signer and what kind of loan can you get with one? What kind of difference does a co-signer make?

Read on and find out

The Benefits of Using a Co Signer

By using a co signer, you essentially get to take on the positive credit of someone else who is in on the deal with you.

When a co signer signs on the dotted line, what they are saying is "If he does not pay, I will pay for him." It is a personal guarantee on your behalf, putting their credit on the line for you.

Co signers are generally family members, mom or dad, though sometimes friends are willing to co sign as well.

Co signing will allow you to get a low interest loan on very favorable terms. You will almost definitely be able to get the loan, and if the co signer has great credit you may even be able to get a great loan.

Can You Get a Loan Without a Co Signer?

Absolutely. Although the loan terms may not be as good, remember that dealerships want to sell you a car. They are not trying to make it hard for you, they just want to make sure they are gonna get paid.

If you don not have a co signer, they will usually ask for a higher down payment, higher interest and shorter loan terms. Instead of a 5 year loan, they may only give you a 2 year loan. Instead of 3.9%, they may ask for 7.9%. Instead of no money down, they may ask for $2,000 down.

Remember that everything is negotiable when you are purchasing a car. If you don not have money to put down for a down payment, you can tell them to increase the price or the interest rate instead.

Remember: They want to sell you a car as much as you want to buy one. The trick is to make the deal work for both sides of the deal.

If you are willing to pay a little more on the purchase price to help the deal go through, and they are willing to make a little more profit to offset the risk of taking on a poor credit buyer, then you may very well have a deal.

Co Signer or No Co Signer?

The deal is always cheaper and on better terms with a co signer. There is no question about that.

Whether or not you use a co signer depends entirely on whether or not you have a personal relationship where you feel comfortable asking for someone to financially back you. If so, then by all means go for it. Your bank account will thank you.

by: Irsan Komarga

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