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No Cosigner Car Loans – Possible?

The question itself is a bit vague, but there are usually only two reasons that someone would be faced with the need for a cosigner:  bad credit or no credit, so we will address both situations.

Cosigners for “No Credit” Scenarios

Avoiding a cosigner and getting a car loan with no credit is fairly easy in today’s market. Many automakers even have programs available for first time buyers with the assumption that they have no credit. Often credit scores are ignored as long as the borrower meets income and job requirements. Of course, all of these programs only pertain to the purchase of a new vehicle.

It may be more difficult to get a loan for a used car, but not by much. Even if you have never used credit before, you may want to have a look at your credit report, just to check for fraud or errors. Additionally, you could consider getting a credit card to boost your credit score. You can raise your credit score by 50 points or more just by making six on-time payments on a single credit card and keeping your balance under twenty-five percent of your limit at all times.

Cosigners for “Bad Credit” Scenarios

Avoiding a cosigner with bad credit can be more difficult, especially if you have defaulted on a car loan in the recent past. It may be impossible if you have had a repossession within the previous twelve months. Other than the repossession issue, bad credit can be overcome without a cosigner. The first step is to address the things that are causing you to have bad credit. Get a copy of your credit reports at, then address any errors or omissions. Once that is done, look at any collection accounts that you have. If some of them are small enough, pay them off. Be aware of the statue of limitations on those debts, though. If the old debt is about to disappear from your credit report, it may be best to wait. In most states that is seven years from when it first went delinquent.

If possible, open a credit card account. Even if you need to open a secured account, it will boost your credit score to have a positive item being reported. Keep in mind that you will need to make at least six on-time payments and keep your balance under twenty-five percent of your limit at all times.

You will want to shop your loan around. In many cases a traditional bank may ask for a cosigner, but a credit union, finance company, or an online specialty lender will not.

About the Author

The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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