I am a first-time buyer. Should I get a cosigner?

May 19, 2022

I am a first-time buyer. Should I get a cosigner?

Whether you are a young driver ready to ditch mom’s minivan or a working adult ready to hit the road, buying your first car is an exciting milestone. Of course, like most major milestones in life—such as buying a car or a house—you will need a credit history. 

If your credit history is limited, finding a cosigner for your auto loan can make a huge difference in the process—especially when it comes to interest rates and financing. 

Many first-time buyers use cosigners to qualify for better loan terms even if they could get approved on their own because a cosigner allows them to save hundreds (or even thousands) of dollars in interest over the lifetime of the loan.

Why you might need a cosigner as a first-time buyer.

As a new borrower, you will quickly become familiar with the phrase, “you need to have credit to get credit.” Basically, that means that if you are just starting out (or are working on rebuilding your credit), you might face some hiccups when qualifying for loans. Lenders are looking for someone with a track record of on-time payments and good loan management, so they may be hesitant to take a risk on someone without a trackable history. For first-time buyers who are still establishing their financial footing, cosigning is a great tool to utilize, but there are a few things to consider when deciding whether or not to do so.

What should I know about having a cosigner?

A cosigner is a person who adds their name to a borrower’s loan application and agrees to be legally responsible for the loan amount if the borrower misses a payment or is unable to pay.

Cosigners are commonly used in situations when a borrower is struggling to get approved for a loan based on their credit score. If you find yourself in that situation, don’t take it personally. Lenders tend to view people with no credit as high risk. This will change once you begin making regular payments. 

What are the advantages?

• By using a cosigner, you may qualify for lower interest rates—which can make a huge difference when it comes to making your car payments affordable.
•  A cosigner can help you establish credit, which will continue to build as you make payments on your loan.
• A cosigner will typically have better credit or a higher income than the primary borrower (that’s you), so their assistance could help you finance a car you might not otherwise be able to afford.

What are the disadvantages?

• Your co-signer will also be on the hook for your debt and sharing a debt can be a challenging experience for some people.
•  A cosigner may face damage to their credit history if you miss payments and they may be required to pay late fees or collection costs if your loan goes unpaid. 
• They can also be required to pay back your loan if you file for bankruptcy or pass away.

What if I can’t find a cosigner?

If you can’t find a cosigner to help you with your first-time car buying experience, that doesn’t mean you’ll be stuck taking the bus. Dick Says Yes is a used car dealership in the Dick Hannah family that specializes in auto loan financing for buyers with bad credit, no credit, poor credit, excellent credit, and everything in-between.

Our business is built upon connecting people to the right vehicle and—as the largest family-owned auto group in the area with thousands of cars to choose from—we are well-equipped to help you drive away happy. 

If you are concerned about financing or afraid you won’t qualify, just contact the Dick Says Yes team for guidance. Whatever your circumstances, we can show you how to get the best deal available on a vehicle you’ll be excited to drive. Plus, included with every used vehicle we sell, you’ll get our Peace of Mind Pre-owned Promise and a 5-day Exchange Policy.