Write About Everything

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 goal is to help you make better financial choices by offering you interactive financial calculators and tools that provide objective and unique content, by enabling users to conduct research and compare information for free to help you make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that compensate us. This compensation may impact how and when products are listed on the site, such as such things as the order in which they appear within the listing categories in the event that they are not permitted by law. This applies to our loan products, such as mortgages and home equity, and other home lending products. However, this compensation will have no impact on the information we provide, or the reviews appear on this website. We do not cover the vast array of companies or financial deals that might be available to you. Oliver Rossi/Getty Images

2 min read published 12 October 2022

Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the details of taking out loans to purchase an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances through providing precise, well-researched and well-informed information that breaks down otherwise complex subjects into digestible pieces. The Bankrate promise

More info

At Bankrate we are committed to helping you make better financial decisions. While we adhere to strict editorial integrity ,

This post could contain some references to products offered by our partners. Here’s an explanation for how we make money . The Bankrate promise

Established in 1976, Bankrate has a proven track record of helping people make smart financial choices.

We’ve maintained this reputation for over four decades by demystifying the financial decision-making

process and giving customers confidence in the decisions they will do next. process and gives people confidence in the next step.

You can rest assured that we’ll put your interests first. All of our content was authored in the hands of and edited by

We make sure that everything we publish will ensure that our content is reliable, honest and reliable. We have loans reporters and editors concentrate on the points consumers care about the most — different types of lending options, the best rates, the top lenders, ways to pay off debt , and more . This means you’re able to be confident about investing your money. Integrity of the editing

Bankrate adheres to a strict code of conduct standard of conduct, which means you can be confident that we put your interests first. Our award-winning editors and journalists create honest and accurate content that will aid you in making the best financial decisions. Our main principles are that we appreciate your trust. Our goal is to provide readers with accurate and unbiased information, and we have standards for editorial content in place to ensure that happens. Our editors and reporters thoroughly verify the truthfulness of content in order to make sure the information you’re reading is accurate. We maintain a firewall with our advertising partners and the editorial team. Our editorial team does not receive any direct payment by our advertising partners. Editorial Independence Bankrate’s editorial staff writes in the name of YOU – the reader. Our goal is to give you the most accurate advice to help you make wise financial choices for yourself. We follow strict guidelines to ensure that our editorial content is not affected by advertisements. Our editorial team receives no directly from advertisers, and all of our content is verified to guarantee its accuracy. So, whether you’re reading an article or a report, you can trust that you’re getting reliable and reliable information. How we make money

You have money questions. Bankrate has answers. Our experts have been helping you master your finances for more than four decades. We are constantly striving to provide consumers with the expert advice and tools required to make it through life’s financial journey. Bankrate follows a strict , so you can trust that our content is truthful and accurate. Our award-winning editors, reporters and editors provide honest and trustworthy content that will help you make the best financial decisions. Our content produced by our editorial staff is factual, objective, and not influenced by our advertisers. We’re honest about how we are in a position to provide quality information, competitive rates and useful tools to our customers by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products andservices or when you click on specific links on our site. This compensation could affect the way, location and in what order items appear in listing categories, except where prohibited by law for our mortgage, home equity and other home loan products. Other factors, such as our own website rules and whether or not a product is available within your region or within your personal credit score may also influence the manner in which products appear on this site. Although we try to offer a wide range offers, Bankrate does not include specific information on every financial or credit product or service. Co-signing as a customer could allow the vehicle to be owned for a friend or family member who might not be eligible for financing without your help. But co-signing carries a risks, as you are both legally responsible for the loan, missed payments or default will impact your financial situation. If the car owner is accountable, co-signing can increase your credit score. Five ways to safeguard yourself as a co-signer Consider these points to protect 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 and family members The biggest risk when being a loan co-signer is potential damage to your credit score. In general, you should aid a family member or friend member you trust- someone with a consistent 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 financial history or age. 2. Make sure your name is on the title of the vehicle. Co-signers don’t hold ownership of the vehicle. This means the way you are named to the loan agreement is crucial. If you’re not listed to the title of the vehicle, you might not be able to claim legal rights to the vehicle, however you would be on the hook for any future payments. Check that the title identifies the primary owner and yourself. So, the car can’t be transferred without two parties having their signatures. 3. You should draft a contract. While you both agree on the loan in its entirety, having a separate contract stating your expectations of the primary borrower is an additional layer of security and serves as an indicator of the contract’s seriousness. This contract doesn’t have to be too complex. It’s just a promissory note that outlines the obligations, costs and what default means each party. Once you have both agreed, bring the document to a notary in order to be signed. 4. Make sure you track monthly payments. One method to increase confidence in the primary borrower’s ability of paying is to keep track of the schedule of monthly payments. It can be as easy as setting up a reminder on a calendar to check on the amount they spend. While this might feel awkward however, keep in mind that your credit score is at risk. Just reach out and open the conversation to keep track of your friend or family member without supervising the loan. 5. Be sure to have the funds for payments. In the event that all else fails it is essential to ensure that you will be able to pay the payments on the loan. If you’re not able to pay back the lender then your credit score will be in danger as you could risk default and other legal actions. The primary borrower has the majority of the responsibility, but you are ultimately on the hook for the loan as co-signer. What happens when you co-sign an auto loan impacts your credit score The risk of co-signing for a car loan aren’t difficult but could be serious. If the person who you co-sign for doesn’t pay, your may be in for a major loss and you’ll be on responsible for the loan. There are also positive effects to your credit score Credit mix: Depending on your current open credit accounts, adding the car loan on your credit file can enhance what’s called the credit score. The credit mix comprises 10% of the FICO credit score. History of payments: Just as your score may decrease if the primary borrower doesn’t make timely payments, it’s possible to benefit but on less of a scale- from them making consistent on-time payments. The bottom line Acting as a co-signer is a big financial choice that could lead to interpersonal or financial difficulties. However, for many, it can make the difference between owning a vehicle or not. So if you decide to co-sign the loan, protect yourself and be certain you are able to pay for the loan in the event that the principal borrower fails to pay. Find out more

SHARE:

Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ways and pitfalls of borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain confidence to manage their finances with precise, well-researched and well-sourced information that breaks down otherwise complicated topics into digestible pieces.

Auto loans editor

Next Part of Financing the purchase of a car with a co-signer Auto Loans

4 min read on Sep 20 20, 2022 Auto Loans

3 min read Sep 21 2022, Auto Loans

3 min read on Sep 20 20, 2022 Auto Loans

2 minutes read on Sep 12, 2022 Auto Loans

2 min read Oct 21, 2022 0 min read March 22 2023

If you enjoyed this post and you would certainly like to obtain more information regarding same day online payday loans texas kindly visit our own web-page.