If you’ve been told you don’t have enough income to take on a car loan, consider adding a co-borrower.

Qualifying for an Auto Loan With Help

Co-Borrowers and Car LoansIf you have a spouse or life partner, you could bring them onto your next auto loan as a co-borrower, sometimes called a joint applicant.

Co-borrowers help you qualify for a car loan by adding more income to your application. Usually, co-borrowers are married couples or life partners so that your incomes can be combined or intermingled.

When you apply for an auto loan with a co-borrower, the lender adds both of your incomes together to meet the income requirements. Most lenders prefer W-2 income that’s proven with computer-generated check stubs, showing year-to-date income.

If your spouse or life partner doesn’t have any income, or very little income, it may not boost your approval odds that much. However, with a stable, provable income, it could help you get approved, as well as qualify for better loan terms or a higher loan amount.

This is because both co-borrowers are held responsible for the loan, which means there’s less risk because there's more income and more people that can pay for the vehicle!

Who Gets the Car With Two Borrowers?

Co-borrowers have equal ownership rights to the car. Both of your names appear on the title, since you’re both responsible for paying on the loan.

If it ever gets to the point where you want to relinquish your rights to the vehicle, or simply want out of the loan, there’s a way to do just that. As long as you qualify, you may be able to refinance, which removes you or the co-borrower from the loan.

This only works as long as the remaining borrower can afford the car, and is qualified to take on an auto loan by themselves.

Is a Co-Borrower the Same as a Cosigner?

Co-borrowers are different from cosigners. Cosigners help if you have credit problems because they lend you their good credit score, not their income. A cosigner’s income isn't added to your car loan application to get you approved for higher loans amounts. The only time a cosigner’s income is considered is when they apply and prove they have the income to cover the loan if you're unable to.

On the other hand, co-borrowers don’t assist you with credit score issues like cosigners do. Both co-borrowers’ credit ratings are considered, and usually, the lowest one is used to meet credit score requirements.

If you need someone to increase your auto loan approval odds because of a low credit score, a cosigner is the person for the job, not a co-borrower.

Can’t Get a Co-Borrower or a Cosigner?

Not everyone has the ability to ask another person to help them get into a car loan. If you’re in this position, consider subprime financing. Subprime lenders look at more than just your credit score during the process, and they tailor an auto loan to your situation.

To get matched to a dealer in your local area that has the lending resources you need, complete our free car loan request form. Here at Drivers Lane, we’ve been connecting borrowers to dealerships near them that can assist bad credit borrowers for over 20 years. Start right now!