The common question running through a first time car buyer’s mind: “Is it possible for an eighteen year old to purchase a car when the cosigning parent has a bad credit history?” Bad credit score, zero credit history and inadequate information about auto loans can compel you to think that having a cosigner is the only way out. A cosigner can drastically improve your chances of getting approval for an auto loan. However, purchasing a car is still possible in times when you cannot find a cosigner. Moreover, breaking some common conundrums about cosigning can provide a great deal of clarity in order to obtain the auto loan for your dream car.
Buying a Car without a Cosigner: Unravel the Mysteries
Buying a car without having a cosigner can be a tricky task. Many car buyers are ignorant about what happens when one doesn’t have a cosigner. Do not make an ill-informed buying decision. Learn which cosigning conundrums keep us from buying a car and what are the solutions to break them?
1) Conundrum: Without a cosigner, I am bound to pay high interest rates.
Solution: A huge down payment is the ultimate evidence of your credit worthiness. A lump-sum amount at the beginning of the auto loan term will put you in a good position to bargain for good interest rates. Additionally, putting money down reduces the amount of your monthly payments. Remember that more the down payment, the lower will be your future auto loan payments. Once you put a good amount of down payment, the approval for the auto loan will not require a cosigner.
2) Conundrum: I need an exceptional income record for obtaining auto loan without cosigner.
Solution: If you have suffered from bad credit in the past, your creditworthiness is assessed by your current income. The amount of monthly income along with the stability of the employment plays a huge role in determining your reliability. A minimum monthly income of $1,500 is considered ideal for getting an approval without a cosigner. However, the minimum income requirements vary from lender to lender. Therefore, make sure you keep regular track of your income pay stubs and use it as leverage to obtain an auto loan without a cosigner.
3) Conundrum: If I don’t have a cosigner, I cannot buy a new car.
Solution: When you do not have a cosigner, it may seem that new cars are out of reach. But, it is far from truth. A used car with a low price tag looks less risky to a lender. However, your options do not end there. With a strong FICO score and regular efforts to build a strong credit, you can purchase a new car even without a cosigner. In order to improve your credit score, build a good debt to income ratio, keep your credit utilization low and make timely payments. Once you have a good credit score, you can purchase a new, more reliable and updated car.
It is common to think about all the support you can get while applying for an auto loan, a cosigner being one of them. However, it is possible to obtain an auto loan even without a cosigner. With the rightly calculated moves, your dream of obtaining a new car will not require the pillar of support in the form of a cosigner.