There is a multitude of reasons why someone may choose to apply for a joint auto loan. Some of those reasons include having poor credit, limited credit history, or insufficient income to purchase a car individually. Regardless of the reason, one seeks a joint auto loan, there are several questions will come to mind.
Whose credit score is used on a joint auto loan?
The question of whose credit score is used on a joint auto loan is probably one of the most important. Incomes can be combined, but credit scores, unfortunately, cannot. The truth is that it is important for both parties to have an acceptable credit score and payment history. The lender is taking both applicants’ credit history and financials. Both applicants will be listed on the loan, car title, and will share responsibility for repayment.
What are the benefits of getting a joint auto loan?
A joint auto loan can help you get approved for a car loan you could not qualify for on your own otherwise. This can include a larger loan amount as well as a lower interest rate (APR). Lower interest rates on loans mean that you pay less interest over the lifetime of the loan.
Is a joint auto loan the same as having a cosigner?
The short answer is no. In some ways, getting a cosigner is like a joint auto loan. This is because in both cases it can help you get a loan approval. However, a joint auto loan means that both parties own the car and are responsible for repaying the loan. Joint auto loan applicants both share responsibility for damages caused should there be a car accident. A cosigner does not share joint ownership of the car, however, has a liability to repay the loan if the main applicant fails to make payments. A cosigner with excellent credit can improve your chances of being approved for a loan while allowing you to retain full ownership of your new vehicle.
Can I remove a joint applicant or cosigner?
If you improve your credit and financial situation, you can greatly increase your chances of getting an independent loan approval. You can re-finance auto loans and transfer to sole ownership if you meet the requirements to qualify for an auto loan on your own. Poor credit is not a lifetime sentence. There are several ways you can improve your credit history and credit score. The most important part is having the dedication to do what it takes.