Can A Cosigner Have Bad Credit
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Can Your Cosigner Have Bad Credit?

Getting a job can be a bit difficult, and that shouldn’t stop you from getting a car loan. If you are not currently employed and still looking to get a car loan, then you have come to the right place. 500 Below has all the means to make that happen.

We realize that financing is not something that comes easy, especially when you are on disability, on bad credit, or maybe most of the income is coming from disability funds or social security. But we don’t want you to lose any hope – as we believe, “DIFFICULT DOESN’T ALWAYS MEAN IMPOSSIBLE.

Getting a car loan when unemployed

When you are unemployed, you need a car to get to job interviews to increase your chances of getting a job.

When you don’t have any source of income, getting a car loan can be a bit difficult. However, there are many other ways you can get a car loan while being unemployed. All you need to do is show the lender that you have other sources of income to make the payments. If you can do that, there is no way you can’t get a loan.

Getting someone to cosign your loan

The best and perhaps the easiest way to get a loan during unemployment is by getting a co-signer. Having a co-signer puts you in a better position as it shows that there are two people responsible for repaying the loan. This can obviate the problem of not having a regular income.

However, the co-signer will have sufficient credit and income to pay the loan, and your success will impact their credit, and so will your failure. So always make sure you pay your payments on time.

Cosigning a loan makes the loan application attractive for the lender, and lenders are more inclined towards giving you better and favorable terms such as a low rate of interest, lower fees, and better flexibility.

People need a cosigner when they are incapable of applying for a loan alone. You can one of those people and desperately need a cosigner. There can be many reasons for that, such as bad credit history, inadequate monthly income, or lack of credit history.

Non-Taxable income

  • Social Security Disability
  • Alimony
  • Social Security
  • Child Support

These are some of the non-taxable incomes that come along with the regular income, generally on a monthly basis. These sources of income can influence the loan decision to be in your favor giving the assurance that you are capable of making timely payments.

What other types of income sources need to be considered?

As we have already established that you don’t have regular PAYG sources of income, but what most people fail to realize is that there are other sources of income that are viable and can help them get a car loan.

It’s time for you to start thinking outside the box and identify means to show proof of alternate income.

You might be a freelancer working from home, which can also count as a viable income. Make a record of your freelance income by showing your bank statements, incoming transactions, and eBay invoices.

You can also have a rental income or making a room available for rent at your property, also called automatic income. Any regular source of income you have can increase your chances of getting a loan.

About to start a new job, can I get an auto loan?

If you are about to start your new job, then you must have the employment contract, and your date of joining has also been arranged. Some lenders do give loans on the basis of the employment contract. The employment contract is proof of regular payment in the future. There are two conditions, however, that you need to meet in order to approve for the loan:

  • There must be at least a one-month gap between your current and previous job
  • Your new job is in a similar industry as your last job

Best case scenario, if you have passed through your probation period, then there is no way you shouldn’t qualify for a loan.

Applying for an unemployment car loan

If you have decided to apply for an auto loan, we suggest opting for a cosigner or borrower. Get one of your family members, a relative, or a close friend to cosign the loan for you so that the procedure can go smoothly.

If you have other sources of income like the ones we mentioned above, bring us the documents that can prove that, and we will make sure you get approved for a car loan right away.

How 500 Below Cars handles it

We have thousands of customers who got approved for a car loan while they were unemployed. Yes, having a steady source of income is always a plus, but if you are currently not employed and looking to buy a car, we can help you.

Schedule an appointment with us so that we can work together and figure out alternate means and navigate all possible options that can help you get a loan. We can talk to your family members if they want to cosign for you, find other possible means of showing your income. In short, when you contact 500 Below Cars, you never leave disappointed. 

Getting A Car With A Bad Credit Cosigner

 

Before we jump into how to get a vehicle with a bad credit cosigner, we need to lay down the groundwork and understand the foundations of bad credit and a cosigner.

Auto Loan Cosigner Foundations

 

What is a cosigner?

A cosigner is someone who applies for the loan with you agreeing to pay the debt if you can. The cosigner, as the name says, is someone who signs the application of the loan with you, which eventually guarantees a loan. A cosigner stands by the borrower so that the loan provider has enough confidence to approve the loan. The lender believes that two people taking the loan is a safer bet, as there are now two people involved in paying the debt.

Why do you need a cosigner?

The most straightforward response to this question is that cosigning a loan makes the loan application attractive for the lender, and lenders are more inclined towards giving you better and favorable loan terms such as a low rate of interest, lower fees, and better flexibility.

People need a cosigner when they are incapable of applying for a loan alone. There can be many reasons a person would need a cosigner, such as bad credit report history, inadequate monthly income, or lack of credit history. You will also need to make sure you have a cosigner with a good/decent credit score as banks usually don’t provide loans to people with a bad credit score. However, if you have bad credit and can’t find a cosigner, no worries, we have put together a blog on how you can get a car loan with a bad credit score.

What is considered bad credit?

Bad credit is when a person has a history or poor loan payment history increasing the likelihood that in the future, that same person will not be able to make payments on time. A credit score is a representation of how good an individual is with timely payments and is also a reflection of your financial stability. When someone has a bad credit score, he or she may find it challenging to get a loan, borrow money at a reasonable rate because they are considered riskier investments that will not pay off. Here are the three things that you should remember when understanding bad credit:

  1.  A person with bad credit will have a history of not making timely payments on bills
  2. Your bad credit is a representation of your low credit score, and that is usually under the score of 580 on a scale from 300 to 850
  3. All those people with bad credit will find it challenging to get the loan or obtaining a credit card.

A credit score can have a significant influence when it comes down to lenders deciding what interest rate should be suitable for you. You need to check your credit scores from different credit bureaus before you start looking for a car to buy.

Even if you have bad credit, getting a car loan is still a possibility. Just because you have been turned down by other dealerships doesn’t mean 500 Below Cars can’t get you a car.

What happens when I need a cosigner, but they have bad credit?

Having a cosigner with bad credit doesn’t necessarily mean that they cannot get a loan. The purpose of the cosigner is basically to help you get the loan.

There are two folds of having or becoming a cosigner. One is that you can bring someone who has a better credit score and payment history guaranteeing the loan in case the other party fails to do so. The other fold is that their income combined with your income can make a solid reason for you to get a loan and consequently increasing buyer’s power.

If you have a terrible score then or a low income, looking to get a car loan, one of the ways you can get this done is if you pay a hefty down payment. Lenders are more likely to approve your credit application, which has enormous equity at stake on the asset they are purchasing. So, if you are struggling to get approved for a loan, start saving up at least 30% of the down payment. A person with a bad credit score needs to show the lenders that they are not taking a significant risk on you.

So, if someone has a bad credit score, there is still a chance that they can be a cosigner. If the credit score is in the 500s, then it is relatively easier to get a loan, but that will come at a high-interest rate, but getting the loan will still be possible.

How is a cosigner treated for auto loans?

Getting a cosigner for auto loans can significantly help the borrower get a better rate at the interest and on the overall monthly payments. However, both the borrower and the cosigner need to be clear for the repayment expectation related to the loan. Loan providers and Auto financers often take a look at the late payments when the due dates are missed, so the loan contract must be studied carefully.

How do you find a cosigner?

Under standard cases, a cosigner is usually a parent or an elder sibling. It is difficult to get a loan on your own, especially when you are a student or recovering from student loans. However, having a family member to cosign is not always the only option.

Your next best option can always be the people you know and trust. Yes, it can be a bit awkward for someone outside your family to become a cosigner, but sometimes it’s the best option. Your friends can help you at the time when you need them.

How can 500 Below Cars handle it?

Now given all that information, you might be thinking that cosigning is difficult, and it is not easy to be a cosigner with bad credit, and that is why we are here. Your parent, a spouse, or the parent of the buyer under the age of 21 years can easily qualify as potential cosigners for you. As far as the credit score goes, it doesn’t matter. So if you like to schedule an appointment with us to see if we can help put you in a car today.

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