Buying your first car can be one of the most exciting and yet daunting tasks of your life. If you have never taken out any kind of loan before, it can seem nearly impossible to get a car loan. Without a credit history, many banks and other financial lenders may be hesitant to fund your car purchase because they do not have a track record to go off of. One simple way to increase your chances of first time car financing is to have a co-signer on the car loan with you.
Many young or inexperienced borrows are able to get a car loan because they have a co-signer. A co-signer is generally a family member like a parent or someone else close to you that has an established credit score. By signing a car loan agreement, this individual agrees to make payments if you, the original debtor, default on any payments. Because of the risk involved in this, you will need to find a co-signer who trusts your ability to make all of your payments and who has the ability to make payments if you cannot.
If you choose to have a co-signer on the care loan with you, it is better for the co-signer to have a positive credit sore than a negative credit score. If his or her credit score is poor, it may be better to rely on your own absence of a credit score rather than their score. The reason for this is because the lender divides his or her risk between the first time car buyer and the co-signer. You can increase your chances of first time car financing by showing potential lenders that you or your co-signer will fulfill all payment obligations.
Don’t let your lack of a credit history keep you from purchasing your first car. Put potential lenders more at ease and improve your chances of first time car financing by asking a family member or trusted friend to be your co-signer.