What Is a Personal Loan With a Cosigner?
Editor’s note: At Lantern, we strive to help you make financial decisions with confidence. To do this, we occasionally feature content that includes information about our partners and their products or services. We do not provide, endorse, or guarantee any third-party product, service, information or recommendations—and our opinions are our own.
Share this article:
What is a Cosigner?
Advantages of Working with a Cosigner
The Difference Between a Cosigner and a Co-Borrower
How Does Using a Cosigner for a Personal Loan Work?
Who Makes a Good Cosigner?
What Are the Risks to Consider Before Getting a Cosigner?
What Cosigners Should Consider Before Signing On
What will we do if you can’t make a payment? When will the loan be paid off? What are you willing to do to ensure you make your payments on time?
What to Do If You Don't Have a Cosigner
Wait. The first is to be patient while you build your credit. You can do that by opening a credit card and paying your balance in full and on time. That activity will be reported to credit bureaus and, over time, may build your credit history and be reflected in your credit score. Settle for a smaller loan. You could also consider borrowing less money. Sometimes you only need a cosigner if the amount is over a certain threshold. Could you make do with less money, especially if it means you could pay off the loan faster (also helping your credit)? Look into secured loans. Consider whether you have any assets you might be able to put up as collateral for a secured personal loan. That could be real estate, your car, or a savings account. Shop around. There are many different types of personal loans (we’ll cover more in the next section), and different lenders have different qualifications for applicants, so you may find that you qualify for a loan elsewhere, even if it is at a higher interest rate. You’ll have to decide if that high rate is worthwhile to get access to cash.
Alternatives to Getting a Loan with a Cosigner
Personal loans for bad credit. The lenders who offer these loans will look at other qualifications besides your credit score. These loans may be for lower amounts and may have higher interest and fees, but they may help you rebuild your credit so that later, you can qualify for better financial products. A personal loan for a car. This may be an alternative to an auto loan if you’re looking to buy a car. These loans may offer better rates than other options because the car can serve as your collateral. If you find yourself unable to pay back the loan, the lender could seize your car to cover what you owe. A credit card, secured or unsecured. People with bad credit or not much credit history may only qualify for a secured credit card, which requires a cash deposit from you. If you make your payments on time, you may eventually qualify for an unsecured credit card, which doesn’t require that security deposit.
Build Your Credit to Qualify for Better Financing
Frequently Asked Questions
About the Author
Share this article: