How to Secure a No Cosigner Auto Loan

By | October 7, 2011

When you are trying to purchase the much needed car to make your life a bit easy, you stumble upon the word “co-signer”. Co-signers are people who offer guarantee to pay off the loan in case of your default on the payment by signing for you in the loan application. They can be your parents, relatives or friends.

Having a co-signer has its own advantages. It acts as a risk protection for the borrower and thus lenders tend to favor them. The lender feels assured that the risk is not too high. The amount of vehicle loan is also based on the credibility and annual income of the co-signer. The rate of interest offered by the lenders are also comparatively less.

However, inability to secure a co-signer for yourself should not stop you from applying for auto financing. No co-signer auto loan is one of the many methods you can get the loan for the dream car of yours. It can suit your purpose and help you accomplish your goal. When you set your mind to get auto loan without a co-signer, there are some factors that you need to consider:

Income: Absence of a co-signer may not at all be a problem if you are working and if you have a stable source of income. The lender may ask you to show income proof, and then you will need the pay stub. So keep your pay stubs safe. You may also need a employment certificate which will help the lender to ascertain the risk and accordingly offer the rate of interest. If you find it too high, try to negotiate. If discussions fail, do not get tensed, simply move on to the next lender.

Good credit scores: The requirement of the co-signer arises from the scare that the lenders face regarding the payment of the loan. If the borrower has good credit scores, the risk perceived by the lenders reduces. Then the applicant has a better chance of getting the desired amount of the loan amount at lower rates of interest. So if you are thinking of buying something on loan, try to make your payments on previous credits in time and definitely without default. It will prove worthwhile in your credit ratings. However, if you already have bad credit scores in your financial report card, then try the various lenders who are willing to finance bad credit auto loans without a co-signer.

Down payment: The availability of the loan also increases if the applicant can provide a substantial amount of money down. If you have a good amount of free reserves with you that are lying idle, you can use it making down payment for your car. It can get to start off with an advantage. Additional guarantee is then not required, moreover the lender will be ready to negotiate the terms to suit your preference. The idea behind is that if a person is ready to part with large amount of money at the beginning, he will be keen to pay off the rest of the loan and own the car as quickly as possible.