Should I Cosign a Car Loan for Someone in Halton?

Should I Cosign a Car Loan for Someone in Halton?

Posted on May 31, 2021

We often suggest using a cosigner to help anyone with bad credit get a better deal on an auto loan. But what about the other side of the equation?  If you are asked to cosign a car loan for someone, is it a good idea? What are the risks?

Our Halton auto loan team explains everything you need to know about becoming a cosigner on a loan.

What is a cosigner?

A cosigner is someone who guarantees a Halton auto loan for someone else. If the primary borrower has bad credit or cannot qualify for the loan, you can supplement their credit score with your own, which could mean they get the loan.

However, if the main borrower defaults, it will be down to you to repay the loan each month. Failure to do so will mean the same kinds of outcomes as if you were the primary borrower.

It’s quite the responsibility but can also help get someone out of a jam.

Is it a Good Idea to Cosign a Car Loan for Someone?

Unfortunately, this is one of those impossible questions. We would only really know the answer to that if we knew you and the primary borrower.

If you know and trust that person, it may be a good idea. If you could comfortably cover the loan if worst came to worst, it may be a good idea.

If issues with paying the loan would ruin a perfectly good relationship with that person, it may not be a good idea. If having to potentially cover the loan until it’s all paid off could put you in financial difficulty, it is not a good idea to cosign the loan.

The vast majority of auto loan cosigners never have to do a thing. Most borrowers repay the loan in full without a problem but you have to plan for the worst.

What are the risks of being an auto loan cosigner?

The main risk of being an auto loan cosigner in Halton is that you’ll have to take over the loan and repay it.

If you fail to cover the loan, both of you will be impacted. That means a hit to your credit score, potential legal proceedings or repossession of the car.

We all know how life likes to challenge us or throw a curveball every now and then so you need to be prepared for that. If you think the monthly payments will put you into difficulty, you need to think carefully.

If you know the primary borrower well and they are trustworthy in your eyes, being a cosigner can be rewarding. It helps them out of a situation and can earn a lot of gratitude, potentially for doing nothing but signing a form.

Just make sure you’re able to survive if things go the other way though.

Contact Unique Chrysler for help, advice and competitive Halton car finance and leasing.

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