How to protect yourself when co-signing a car loan Part Of Financing a Car With a Co-Signer In this series Financing a Car With a Co-Signer Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial decisions by providing you with interactive tools and financial calculators as well as publishing authoritative and original content, by enabling you to conduct your own research and compare data for free to help you make financial decisions with confidence. Bankrate has partnerships with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that appear on this site come from companies that pay us. This compensation can affect the way and where products appear on the site, such as, for example, the order in which they may appear within the listing categories, except where prohibited by law. This applies to our mortgage, home equity and other products for home loans. But this compensation does have no impact on the information we publish, or the reviews appear on this website. We do not contain the universe of companies or financial offers that may be accessible to you. Oliver Rossi/Getty Images

2 min read published on October 12, 2022.

Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers in navigating the ways and pitfalls of borrowing money to purchase cars. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers to control their finances by providing clear, well-researched information that is broken down into complex subjects into digestible pieces. The Bankrate guarantee

More info

At Bankrate we aim to help you make better financial decisions. While we are committed to strict ethical standards ,

This article may include some references to products offered by our partners. Here’s how we earn money . The Bankrate promise

Established in 1976, Bankrate has a long history of helping people make smart financial choices.

We’ve earned this name for over four decades by demystifying the financial decision-making

process, and giving people confidence in the decisions they will do next. Bankrate follows a strict ,

so you can trust you can trust us to put your needs first. All of our content was created in the hands of and edited by ,

They ensure that what we write ensures that everything we publish is accurate, objective and trustworthy. We have loans reporters and editors are focused on the points consumers care about the most — the various types of loans available and the most competitive rates, the best lenders, how to pay off debt and more . This means you’re able to be confident about investing your money. Integrity of the editing

Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors, reporters and editors create honest and accurate information to aid you in making the best financial choices. The key principles We value your trust. Our mission is to provide readers with truthful and impartial information, and we have established editorial standards to ensure that this happens. Our reporters and editors thoroughly check the accuracy of editorial content to ensure the information you’re reading is true. We have a strict separation between our advertisers and our editorial team. The editorial team of Editorial Independence Bankrate does not receive compensation directly from our advertisers. Editorial Independence Bankrate’s team of editors writes for YOU – the reader. Our goal is to give you the most relevant guidance to make intelligent financial decisions for your personal finances. We adhere to rigorous guidelines that ensure our content is not influenced by advertisers. Our editorial team is not paid direct compensation from advertisers, and all of our content is verified to guarantee its accuracy. So, whether you’re reading an article or a review you can be sure that you’re getting reliable and reliable information. How we make money

If you have questions about money. Bankrate has answers. Our experts have been helping you manage your money for more than four decades. We strive to continuously provide consumers with the expert advice and tools required to succeed throughout life’s financial journey. Bankrate follows a strict , which means you can be sure that our content is truthful and accurate. Our award-winning editors, reporters and editors produce honest and reliable content to help you make the best financial choices. Our content produced by our editorial team is objective, factual, and not influenced by our advertisers. We’re honest about how we are in a position to provide quality content, competitive rates, and useful tools to you , by describing how we earn our money. is an independent, advertising-supported publisher and comparison service. We are compensated for the placement of sponsored products and, services, or when you click on specific links on our site. Therefore, this compensation may affect the way, location and in what order products are listed, except where prohibited by law. This is the case for our mortgage and home equity products, as well as other home loan products. Other factors, such as our own website rules and whether or not a product is available in your region or within your own personal credit score may also influence how and where products appear on this website. While we strive to provide an array of offers, Bankrate does not include details about every credit or financial item or product. The act of signing off as a cosigner is a way to make it possible to own a car for a friend or family member who isn’t eligible for financing without your assistance. But co-signing carries a risk — since you are both legally responsible for the loan late payments, or default will impact your financial situation. If the car owner is accountable, co-signing may help improve your credit. 5 ways to protect yourself as a co-signer Consider these tips to ensure your financial security should you choose to become co-signer in the future for a . 1. Serve as a co-signer only for close friends or relatives The main risk when being a loan co-signer can cause damage to your credit score. It is best to assist a friend or family member who you trust -one with a steady income that is stable financially. You must be sure that the primary borrower can pay but just didn’t qualify because of their lack of the financial background or their age. 2. Be sure that your name is on the title of the vehicle. Co-signers don’t hold ownership for the automobile. This means that the way you are named on the loan agreement is important. If you’re not listed on the title, you may not have a legal claim on the vehicle but would be on the hook for any future payments. Verify that the title lists you as the owner of the vehicle and not the primary one. The vehicle can’t sell without the two parties’ signatures. 3. You should draft a contract. While you both agree on the loan itself, having a separate contract detailing your expectations of the primary borrower is an additional layer of security and serve as a reminder of the agreement’s importance. The contract does not have to be too complex. Just a promissory note outlining the cost, obligations, and the consequences of default to both sides. After you and your partner have reached an agreement take the document to a notary in order to be signed. 4. Monitor monthly payments One method to be more confident about the ability of the borrower in making payments is to keep track of the monthly payment schedule. It can be as easy as setting a calendar reminder to check on their expenditure. While this might feel awkward, remember that your credit score is in danger. Reach out and start the conversation to keep track of the family member or friend without having to manage the loan. 5. Ensure you can afford payments In the event that all else fails you must ensure that you are able to cover the costs of the loan. If you are not able to repay the lender and your credit score is in trouble — and you may risk default and other legal actions. The principal borrower is responsible for the most responsibility, but you are ultimately on the hook for the loan as co-signer. How co-signing an auto loan affects your credit The risks of co-signing a car loan are simple though potentially serious. If the person you sign for isn’t able to pay, your credit will be hit hard and you’ll be on the responsibility of paying for the loan. There are also benefits to your credit score: Credit mix: Based on the current credit accounts, adding the car loan in your credit score can increase what’s known as your credit mix. The credit mix comprises 10% of the FICO credit score. Payment history: Just as your score may decrease if the primary borrower doesn’t make timely payments It is also possible to gain but on an insignificant scale- from them making consistent punctual payments. The bottom line : Being co-signer can be a major financial decision and could cause financial or interpersonal headaches. But for many, it can make the difference between owning a vehicle or not. If you decide to co-sign the loan take care to protect yourself and make certain that you have the funds to pay the loan in case the primary co-signer defaults. Learn more


The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the ins and outs of securely taking out loans to purchase an automobile. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to control their finances with concise, well-researched, and clear details that cut complex topics into manageable bites.

Auto loans editor

Next Part of Financing an automobile with a co-signer Auto Loans

4 min read on 20th Sep 20, 2022 Auto Loans

3 minutes read on Sep 21 2022, Auto Loans

3 min read Sep 20 and 2022. Loans

2 min read Sep 12 2022, Auto Loans

2 min read Oct 21, 2022. read Mar 22, 2023

If you have any kind of questions relating to where and how you can utilize instant same day payday loans online no credit check, you could call us at our web-site.

About the Author Dwain Echols

Share your thoughts

Your email address will not be published. Required fields are marked

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}


Book [Your Subject] Class!

Your first class is 100% free. Click the button below to get started!