If you’re thinking about taking out an auto loan, but your credit is less than stellar, you may want to consider a cosigner. Having a cosigner on a bad credit car loan is a great way to get the vehicle you need, and a subprime auto loan can give you the opportunity to improve your credit over time.

What Does a Cosigner do for a Car Loan?

Will a Cosigner Help with Bad Credit on a Car Loan?A cosigner’s main role is to help the primary borrower get approved for a car loan. Cosigners don’t have any rights to the vehicle, but they're responsible for making sure that payments are made in the event the primary borrower is unable to make them.

In order for someone to qualify to be a cosigner, they must meet specific lender requirements that include having a good credit score and a stable income. It’s important that you sit down and discuss the role with your potential cosigner. Don’t leave them in the dark, because, after all, they’re putting their good credit and possibly their own money on the line for you.

3 Pros and Cons of Having a Cosigner

Just how will a cosigner help you out on your car loan? Consider these pros to having a cosigner, but be aware of the cons that could affect you and the cosigner:


  • Increases approval chances – When your credit isn’t the best, a cosigner with good credit should help you with a bad credit car loan. Many times, subprime lenders require a cosigner in order to approve you.
  • Helps the primary borrower build credit – In addition to getting approved, having a cosigner can help you improve your credit. You’re essentially “borrowing” your cosigner’s good credit, and as long as you make each monthly payment on time and in full, you can expect your credit score to improve over time.
  • Helps the primary borrower save money – Even if they’re not required, a cosigner can help with bad credit auto loan interest rates, and could save you money. Depending on what the lender is willing to offer, you may find that you can get a better interest rate compared to applying without a cosigner.


  • If the primary borrower can’t pay, the cosigner has to – If you miss a payment or default on the loan, your cosigner becomes responsible for paying it.
  • The primary borrower’s actions affect the cosigner – When someone cosigns, the loan shows up on their credit reports and affects their credit score. If the primary borrower has a late payment, delinquency, or repossession, each negative action equally impacts the cosigner’s credit score. This can cause a problem for the cosigner if they want to apply for other lines of credit and their score is lower, or their available income doesn’t meet the lender’s required amount because of the loan.
  • Removing a cosigner isn’t easy – Once a cosigner signs the loan documents, they can’t just back out of the agreement. In order to remove a cosigner from an auto loan, the primary borrower needs to qualify for refinancing on their own.

Improving Your Credit with a Car Loan

If you have bad credit, a cosigner can help you get a subprime auto loan. Some lenders may even require you to have one in order to approve you. Having a cosigner is a great way to jump start the credit building process. When your credit improves with on-time loan payments, you won't need a cosigner the next time you need to finance a car.

If you're dealing with less than perfect credit and need an auto loan, but aren’t sure where to start, let Drivers Lane lead the way. We work with a nationwide network of special finance dealers that have the lending resources available to help many credit-challenged consumers. Let us help you get the auto financing you need with our no-obligation auto loan request form. It’s free and simple to get started today.