Mindful Car Facts: Co-Signer Role When Purchasing From a Dealership in Covington, LA
Purchasing a vehicle typically means the buyer will need financing. Most people aren't going to pay the price in full for the automobile to drive it off the lot. In some cases, those who are thinking about looking for a car at a car dealership in Covington LA are going to want to be mindful when finding a co-signer before applying for financing. There are some things to know before doing this.
What is a Co-Signer and Why Would Someone Need One?
A co-signer is someone who agrees to take on the repayment of the loan if the borrower defaults on their payments. Basically, a co-signer makes it possible for someone to obtain a loan if they wouldn't qualify on their own. An ideal co-signer is someone who has a good credit score, a steady job, and otherwise meets the requirements for the loan. Someone may need a car co-signer if they don't fit the criteria for investment, have no or bad credit, have a high debt-to-income ratio, or have variable income that's difficult for the lender to predict.
What are the Responsibilities of a Co-Signer?
When a co-signer is used to purchase a vehicle from a car dealership in Covington LA, they are responsible for paying the loan if the original borrower defaults. It is the responsibility of the borrower to make the payments, but the co-signer is responsible if the borrower does not make the payments for any reason. If the person who purchases the vehicle can no longer afford the payments, the lender will look to the co-signer to cover the debts. This can include any late or collection fees that might accumulate because of missed payments. If the payments are not made by the borrower or the co-signer, it can impact the credit of both people.
What Happens if a Co-Signer Isn't Available?
If someone is looking to purchase one of the used cars in Covington LA and they cannot qualify for a loan on their own, using a co-signer is one option for them to consider. If they cannot find a co-signer, there are a few other options to look into. If they do not need the vehicle immediately, it's possible for them to build their credit and try again. They may also consider saving up more money or looking for a less-expensive car, so they don't have to borrow as much and can get the loan. They may also be able to use an asset of theirs as collateral for the loan, ensuring the lender gets their money if the borrower defaults.
If you don't have a high credit score or don't think you'll qualify for financing, using a co-signer can enable you to get the funding needed to purchase a vehicle. This is something you'll want to be mindful of because there are risks for anyone who would think of being a co-signer. Visit a car dealership in Covington LA now to look into the vehicles available and to find out if having a co-signer will be necessary for you to purchase the ride you want.