For those that have less than perfect credit, or no credit at all, a car loan co-signor / co-applicant might be a thought. The term co signor refers to an individual that would be using their credit strength to help another individual without the strength needed to service a loan on their own. A co applicant might refer to an individual that is going to be entering an auto loan application for income strength. This would assist a person that is not able to debt service a loan on their own. The main applicant would still need to make the minimum income requirements on their own to be able to apply. The co applicant would merely boost the income to carry the payment. Both co signor and co applicant would carry the same strength on the auto loan. The loan would report the same way to the bureau as a “J” Loan. This is a “Joint” loan. The loan reports to both applicants bureaus the same. Having a “co” on a loan can certainly assist in interest rate, term, and payment. The thing to be aware of for a joint loan is that it might affect the “co” when applying for another truck loan in the future. We have seen situations where a parent will be a “co” on a loan for a child, and when the parent applies for a car loan on their own in the future, it gets declined because their debt service ratio and credit utilization goes up. This being said it is possible for the co applicant to be taken off the loan at a later date. This would have to be done by the applicant re- applying for a car loan on their own, in hopes of getting approved. This would essentially be buying out the existing car loan with a new loan, and a new lender. This can be affective if the applicant has completed credit rebuilding or has established enough credit to get approved for this new loan. Depending on the situation this method can take 1 year or 2 of rebuilding before getting approved for the re finance. Every situation is different so please don’t use this as a guideline.
Just my 2 Cents