Refinancing your car with a co-signer can help you get approved for more attractive terms by saving you money through lower interest rates and reducing the total amount of interest you pay on your loan. We’ve evaluated the best auto refinance loans based on rates, terms, loan options, customer reviews, and overall quality.
When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information will be reported to the credit bureaus.
Although educational information is collected as part of Upstart’s rate check process, neither Upstart nor its bank partners have a minimum educational attainment requirement in order to be eligible for a loan.
The full range of available rates varies by state. The average 5-year loan offered on Upstart will have an APR of 10.56% and 60 monthly payments of $463 per $20,000 borrowed. For example, the total cost of a $20,000 loan would be $27,795. APR is calculated based on.
5-year rates offered in April 2022. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
Here are some reasons to consider using a co-signer for your auto loan:
Credit issues: If you have a poor credit score, it’s unlikely that you’ll be able to get a car loan on your own. A co-signer can help improve your chances of getting approved for a loan.
Employment history: If you’ve been out of work or have recently lost your job, having a co-signer can help increase your chances of being approved for a car loan. However, if there’s no income from either party, it may be difficult to make payments on time each month and avoid defaulting on the loan altogether.
Lower rates: If your current interest rate is high, refinancing could help lower it, provided the new lender has a lower rate. Lowering your interest rate can make a big difference in how much money you pay each month toward your loan balance. Adding a co-signer will usually lower rates.
No credit history: If the lender requires you to have a credit history, this is where a co-signer with history can come into play.
Just keep to note, if you default on your loan, then your co-signer is held liable and this could damage your relationship.
How will a co-signer help with your car loan?
If you cannot secure financing on your own, a co-signer can help. A co-signer is someone who agrees to take responsibility for the payment of the loan if the primary borrower can’t anymore.
Improve your chance of loan approval: Lenders may hesitate to approve your loan without a co-signer if you have bad credit or no credit. A co-signer with good credit and a steady income will help improve your chances of being approved for the loan.
Potentially qualify for better, more affordable rates: The rate you’re offered often depends on how well (or poorly) your credit scores stack up against those of other applicants. If you have no credit history or bad credit, lenders will likely charge you higher interest rates than they would someone with excellent credit. By having a co-signer agree to take responsibility for the payments, you can often qualify for better rates than if you had to apply on your own.
Chance to build your credit: Whether you are a student or just starting in life, having a co-signer on your loan will help build your credit history. Even if the loan is paid off early, the lender still reports the car loan amount to the credit bureaus as part of your credit profile. Having an established good payment history will lead to an increase in your score over time.
Can you have two co-signers on a car loan?
Some lenders will allow multiple co-signers on an auto loan, which means the lender will accept more than one person’s credit profile.
Can you refinance a car loan with bad credit?
Yes, you can refinance your auto loan with bad credit. However, you will have to pay a higher interest rate on your car loan. This is because lenders consider a borrower’s credit score when deciding whether or not to approve an auto loan application. The higher the score, the better the chances of getting approved for financing.
If you’re considering refinancing, you may wonder how to boost your credit before applying. Here are ways to prepare:
Pay all your bills on time: Paying bills on time is one of the most important parts of maintaining a good credit score. If you have any late payments, make sure they’re all current before applying for a refinance.
Get current on past-due debts: If you carry any unpaid balances or other debts, pay them off as soon as possible. The higher the balance, the more it will impact your score when it comes time to applying for a new loan.
Only apply for new credit as needed: Applying for new credit can ding your score by increasing the total number of accounts listed on your report. While this doesn’t mean you should avoid applying altogether, try to limit applications to just what’s necessary — and nothing more.
Reduce the balances on your credit cards to 30 percent or less of your credit limit. Your credit utilization will significantly affect your FICO score — particularly if it’s over 30 percent — so pay down any accounts with high balances and low limits.
Does refinancing a car hurt your credit?
When you refinance a car loan could temporarily ding your credit score through a hard inquiry, but it’s unlikely to hurt your credit in the long run.
Since refinancing doesn’t increase your overall debt payments but frees up more money if you got a lower rate, it can help bring down the debt-to-income ratio and improve your score.
How to choose the best auto refinance loans with a co-signer
Here are some tips on how to choose the best auto refinance loans with a co-signer:
Shop Around: Auto refinance loans are usually available from various lenders. You should shop around for the best price, the lowest interest rate, and the best terms before you apply.
Eligibility requirements: To get an auto refinance loan with a co-signer, you must meet certain eligibility requirements. The lender may also want to see that you have been making payments on your current car loan on time every month. If you have been late or missed payments in the past, it may be harder to get approved for a new loan.
Customer experience: You can see this on their website through reviews, testimonials, and comments from other customers. It’s also important to see if there’s any way for you to contact them directly and ask questions about their services and their products before committing yourself to anything.
Find a suitable cosigner: The most important step in choosing an auto refinance loan is finding a suitable cosigner with a good credit score and income level. The cosigner must be willing to take financial responsibility for the loan if you fail to pay it off in time or if you fail to make any monthly payments on time.
