Do I Need a Cosigner for an Auto Loan?
by Joey C.
(Staten Island, NY)
Hi, I was wondering if I needed a co signer for an auto loan in my situation. I have good credit but I'm only 23.
The car that I want is a Lexus, but when I went to the dealership they told me that I needed a co signer because I haven't had credit long enough. Is that true or is there a way around that for me? ThanksAnswer:
Hi Joey, It may be true that you'd need a cosigner for an auto loan, because a typical lender (mainly prime lenders) is not going to want to lend a lot of money to someone that has a limited credit history.
FYI: Anyone can get approved for Auto Loans, no matter what your credit. The only issues will be how much you want to borrow, the dealer you work with and the lenders they use.
They will look at things like whether or not you've had prior auto loans, or other installment loans, and how much those were for.
For instance, if you had financed a car before and borrowed $6,000 they would possibly loan you $12,000 the next time around. Which means if you are trying to finance $20,000, then you'd either need a cosigner or $8,000 down.
That scenario was based on prime lenders, but for non prime and subprime, they may be willing to loan more, but your rates would be a bit higher.
There are also other factors that can help your situation to go it alone...Strong job time, solid monthly income, big down payment, if you are a homeowner...etc.
If you've never financed a car before, then you'd probably only be able to borrow $7000 to $10,000 as a first time buyer. This is if you can find a lender that has a first time buyer program.
A credit union is usually the best way to go for first time buyers, but I'm not sure what the credit unions in New York offer.
Here is a link to a credit union locator to find ones in your area http://www.creditunion.coop/cu_locator/quickfind.php
Hope this helps,