3 personal loan lenders that accept cosigners

Personal Loans With a Cosigner: What You Need to Know

3 personal loan lenders that accept cosigners

A cosigner is someone who agrees to take responsibility for personal loan payments if you fail to make them as agreed. There are several reasons you may need a cosigner:

  • Your income is limited, and the lender is concerned about your ability to make the monthly payment.
  • You don't have the required personal loan credit score.
  • Your credit history includes bankruptcy, foreclosure, or short sale.
  • You have credit card debt — or other debt — putting your debt-to-income ratio at a dangerously high level.

When you take out a personal loan, the lender must take your word that you will make the monthly payment until the loan is repaid in full.

If you have a long, positive credit history and good credit score, it's easier for a lender to believe that you will make your monthly payments.

If you have poor credit, a short credit history, or negative remarks on your credit report (even if they're in the past), offering you an unsecured personal loan makes lenders nervous.

A cosigner with good credit helps lenders feel more secure about making the loan. That's because if you miss a payment, the cosigner is expected to make the payment. If you walk away from an unsecured personal loan, the cosigner is on the hook for getting it paid.

Where can I get a loan with a cosigner?

The best personal loans using a cosigner might be found at your local brick-and-mortar bank or credit union — or with an online lender. Not all lenders allow for a cosigner, so your first step is to check with several to find out which will let you fill out a loan application with a cosigner.

3 things to know about cosigned loans

Here are a few important things to know about cosigned loans before you sign up for one.

  1. Your cosigner's credit score matters. A cosigner with excellent credit improves your odds of qualifying for a loan if you have poor credit.
  2. You're not the only one impacted. The cosigner's responsibility for the loan is equal to yours. If you miss a payment or make a partial payment, they are responsible for paying the lender in full. Also, missing payments damages the cosigner's score as well as your own.
  3. You can take the cosigner off later. When your credit score is high enough, you can take the cosigner off. To do this, you'll simply refinance the loan in your name alone.

How to ask someone to cosign on a loan

You're probably nervous about asking someone to cosign a loan, but remember this: Most adults have been in your position at some point. We all start out with a thin (or non-existent) credit score and many of us have needed help getting started. Here are a few pointers for asking someone to be your cosigner:

  • Be upfront. Explain your situation and why you need a cosigner. It may be that you're fresh school and have unexpected medical bills. Perhaps you've landed a new job and need reliable transportation to get to and from work. Whatever your situation, let the potential cosigner know.
  • Discuss the monthly payment. Since the cosigner will be on the hook for any payments missed, discuss how much you can afford to pay and explain how you plan to make those payments.
  • Offer proof of payment. It's possible to make a cosigner feel more comfortable about signing onto your loan by promising to give them proof of payment each month. That way, they never have to worry about a late or partial payment impacting their credit score.

Alternatives to getting a cosigner

Even if you have poor credit, a cosigner is not your only solution. Here are some options to consider.

Some lenders specialize in providing personal loans with no credit. This loan will come with a higher interest rate than other personal loans. Still, getting a personal loan for zero-credit borrowers allows you to be the only person on the loan application. You'll increase your credit history and credit score as you pay off the loan, too.

If bad credit is standing in the way of you and an unsecured loan, try applying to the best personal loans for bad credit.

Yes, the personal loan interest rate will be higher than you might hope, but you can use this loan to reform your credit history and raise your all-important credit score.

Secured personal loan

There are two types of personal loans: a secured loan and an unsecured loan. To this point, we've discussed unsecured personal loans — the type that requires only your signature. A secured loan is different.

With a secured loan, you put something of value up as collateral. If you miss payments, the lender can take possession of and sell this item. Your collateral could be anything of value, a savings account, a retirement account, a vehicle, fine jewelry, art, or land.

Not every lender is equipped to make a secured personal loan (most online lenders do not), but it's worth calling around to find a lender who does deal with secured personal loans.

Personal loans can make life easier. Whether you need to cover debt consolidation, make auto repairs, switch from a variable rate to a fixed-rate loan, or get rid of payday loans with sky-high interest rates, a personal loan can make it happen.

Still have questions?

Here are some other questions we've answered:

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Источник: https://www.fool.com/the-ascent/personal-loans/cosigner/

Getting a Personal Loan with a Cosigner: What You Should Know Before You Apply

3 personal loan lenders that accept cosigners

If you’re thinking about getting a cosigner on a personal loan, there are a few things you’ll need to think about before you apply. We tackle some of the big issues, including when it makes sense to have a cosigner, what lenders offer cosigned loans and what alternatives exist, in the article below.

When Should I Use a Cosigner?

There are a few situations and circumstances where it makes sense to have a cosigner on your personal loan:

  • A low credit score (any score under 650 to 630)
  • Little to no credit history
  • Low or unpredictable income
  • Short employment history
  • High debt-to-income ratio

Low credit score or no credit history: Having a low credit score or no credit history usually means an automatic rejection for most personal loans.

Even with online lenders, which have laxer requirements than banks, you’ll need to have enough credit history to produce a FICO score, and this score should be 600 or above to give you a chance of qualifying somewhere.

If you’ve never had a credit card or applied for a loan, there’s a chance you won’t have enough history to produce a score.

Low income or short employment history: Another factor that could prevent you from getting approved is your income and employment history. This is particularly true for recent college graduates, those who just switched jobs or those with unpredictable income (i.e.

, freelancers, contractors, commission-based workers). Lenders want to see borrowers who have steady income that’s high enough to support repayment on the loan. That’s why many lenders have strict income cutoffs.

Citizens Bank, for instance, requires borrowers have at least $24,000 in annual income.

High debt-to-income ratio: Even if you are applying for a debt consolidation loan, lenders still don’t want to see borrowers with debt-to-income (DTI) ratios above 40% to 45%. the income requirement, this has to do with your ability to repay.

If your DTI ratio is too high, there’s a big risk that you could miss a payment or even default on the loan. DTI ratio is a measure of your monthly debt and housing payments divided by your pre-tax income. Let’s say your pre-tax monthly income is $4,000.

You have a mortgage, a car loan and some student loans, which come to $1,200 a month. Your debt-to-income ratio would therefore be 30% ($1,200 ÷ $4,000).

Any or a combination of these factors could mean a rejection of your application, or a very high interest rate if you are approved. In this case, having a cosigner can improve your chances at approval and securing a low interest rate if your cosigner has good credit.

What to Look for in a Cosigner

Because lenders consider your cosigner’s creditworthiness and information when making a loan decision, you’ll want a cosigner who has good to excellent credit history, several years or more of credit history, stable income, good employment history and a low debt-to-income ratio. You should also know the cosigner well, because he or she will be putting their credit on the line for you. People most commonly cosign loans for their family members, particularly children, spouses and parents.

Where to Get Personal Loans with a Cosigner

Most banks and credit unions allow you to have a cosigner on a personal loan. In many cases, you and the cosigner will need to be a member of the bank.

There are a few banks, Citizens Bank, PNC Bank and TD Bank, that will let you apply for a personal loan without being an existing customer.

It’s harder to find an online lender that allows cosigning on personal loans — in fact, we have only found a handful of them in our research.

Citizens BankNo6.80% – 20.91% with AutoPay
Wells FargoYes5.49% – 22.99%
Navy Federal Credit UnionYes8.19% – 18.00%
PNC BankNo5.99% – 25.49% with AutoPay
TD BankNo6.99% – 18.99% with AutoPay
CitibankYes7.99% – 17.99% with discounts (rate may be higher)
U.S. BankYes7.49% -17.99%
BackedN/A (online lender)2.90% – 15.99%
LightStreamN/A (online lender)3.99% – 19.99%
LendingClubN/A (online lender)8.05% – 35.89%
OneMain FinancialN/A (online lender)18.00% – 35.99%
AvantN/A (online lender)9.95% – 35.99%

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Alternatives to Cosigned Personal Loans

If getting a cosigner is not an option, we recommend considering a secured personal loan or looking for a lender that caters to borrowers you.

Secured Personal Loan

Many banks and credit unions allow their members to take out a personal loan secured by their savings, money market or CD account. Usually the amount of the loan cannot exceed the value of the deposit account.

While securing a loan isn’t risk-free, qualifying for a secured loan will be easier, and most secured loans have pretty low interest rates. For example, Wells Fargo customers can take out a secured loan up to $250,000 with interest rates starting between 5.5% and 13.79% (as of July 2017).

Navy Federal Credit Union also provides personal loans secured by your savings or CD accounts with rates 2% to 3% above your saving or CD rate.

Online Loan

While most banks and credit unions want borrowers with strong credit history and good income, many online lenders operate under a different set of requirements.

Some lenders have credit score requirements as low as 600, and others only require that you have a full-time job offer instead of a current job (which can be great for recent graduates).

Most online lenders will allow you to check your rate online without affecting your credit score, so we recommend shopping around to find a lender that will give you a good deal. We recommend starting with lenders Upstart, Best Egg, LendingClub, OneMain Financial, Avant and Peerform.

Источник: https://www.valuepenguin.com/personal-loans/personal-loan-with-cosigner

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