Why Do I Need a Co-Signer to Finance a Car?

Applying for auto financing at PA Auto Credit can be exciting, but sometimes there are questions surrounding the process. One of the most common questions that our friendly financing experts here at PA Auto Credit receive is regarding when a co-signer for your auto loan is necessary. Here are some of the situations when a co-signer is required and what a co-signer does.

What Does a Co-Signer Do?

A co-signer is someone who agrees to share responsibility for your automobile loan. This can be a trusted individual like a parent or a spouse. If you’re unable to make payments on the loan, the co-signer becomes legally obligated to cover them. While this might seem like a burden, it provides auto lenders additional reassurance that the loan will be repaid in time.

Reasons You Might Need a Co-Signer

Low Credit Score: A lower credit score than average can signal to lenders that you may struggle with repayment. A co-signer who has good credit can help reduce this concern.
Limited or No Credit History: Similarly, if you’re new to credit or have a short credit history, lenders can view you as a higher risk.
Insufficient Income: Your income plays a large role in securing a loan. If your income doesn’t meet the lender’s requirements, a co-signer’s income can be added to yours so that you qualify for the loan.
High Debt-to-Income Ratio: A high ratio means that you have a lot of debt relative to your income. A co-signer can help you balance this out.

Explore Your Auto Financing Options in Fairless Hills, PA

Here at PA Auto Credit, we specialize in helping people find the best auto financing solutions, whether or not you have a co-signer. Contact us today to find the best auto financing option for your situation!