Bad Credit Auto Loans: Should you go Solo or take help of a Co-Signer?
When it comes to a bad credit score, you should be very careful in deciding your auto loan options. Understand the possible pros and cons of taking help of a co-signer or a co-applicant vs. applying on your own.
Exploring Ways of Applying for a Bad Credit Auto Loan
Bad credit is not a situation that can paralyze you from getting an auto loan. The below options are important to help you apply for an auto loan with a strong case. Explore the different options and study the pros and cons to build your strategy.
1. Seeking Help of a Co-Signer
Pros of a co-signer: A co-signer assures to repay the entire amount of the auto loan or any payments that you do not make. As they are liable to pay the auto loan amount, there is financial safety for the lender. The presence of a co-signer on your auto loan can help you get lower APR. A strong credit score of your co-signer can put you in a great position to get quick auto loan approval.
Cons of a co-signer: The biggest problem of having co-signer is the co-signer itself. The auto loan terms and interest rates that you receive will largely depend on the credit score and financial standpoint of the co-signer. Any faulty remarks in the credit report of the co-signer will affect the credit terms that will be provided to the applicant.
2. Finding a Co-Applicant
Pros of a co-applicant:
Cons of a co-applicant:
3. Single Applicant: Applying on your Own
Pros of a single applicant: When you suffer from a bad credit score, it becomes difficult to get an approval on your credit score alone. However, the positive side of being a single applicant is that you are in complete control of the auto loan. The efficiency of your payments will help you to build a stronger financial foundation.
Cons of a single applicant: The presence of a co-signer or a co-applicant can greatly increase the chances of approval for your auto loan. The reason being that if you miss a few payments, the other individual can repay the auto loan. Also, a single applicant will get much higher interest rates as against an application that has a co-signer.
The More the Merrier: Buying a Car with Bad Credit
In the case of a bad credit history, the assistance of a co-signer or a co-applicant will come to your benefit. A single applicant will not be able to avail the best deal due to high interest rates and small auto loan amount. A joint auto loan can help you to obtain a bigger car due to a larger loan amount. Therefore, when you think about your bad credit auto financing strategy, remember the more the merrier.
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