If you have trouble qualifying for a loan on your own, a cosigner can help. A cosigner is a helpful friend or family member who is willing to lend their good financial name to your application as a form of collateral. With their help, you might unlock more affordable terms for your next loan or line of credit.
Unfortunately, not everyone has someone in their life who is willing or able to be a cosigner. Does that mean you can’t qualify for legit loans online without them? Not quite. Let’s find out why below.
What is a Cosigner?
A cosigner is willing to put their name on your application for a loan. By adding their name to this document, they do two things:
- They vouch for your ability to repay what you owe.
- They promise to pay any outstanding debts that you fail to pay back.
These two statements are only worthwhile from someone who lenders deem creditworthy. In other words, someone who has subprime credit because they pay their bills late won’t be an effective cosigner.
A cosigner needs to have good credit to improve your chances of your approval. In fact, the higher their score is, the better.
They may also have to undergo other financial background checks that typically comes with a loan application. They may have to share their salary information and debt-to-income ratio.
Cosigners Take on the Risk of the Online Loan
Once their name is attached to the account, they assume some responsibility for the loan. Most people intend to pay their loans on time, but a freak accident can prevent you from making good on your promise.
If you fail to make your scheduled payments, the lender will call on your cosigner to clear your debts. Not only could the cosigner wind up paying for a cash loan they didn’t use, but they could also see their credit score affected negatively by these late payments, delinquencies, and amounts owed.
Becoming a cosigner is a big decision. Realistically, you have to acknowledge parents, partners, and friends may not feel comfortable putting their financial good name on the line and that is their right.
You also have to consider the fact your loved ones may not have the credit score or income necessary to be a cosigner. While they may want to help you, they can’t do much without these financial status symbols.
Look for Unsecured Personal Loans Online
While going online doesn’t guarantee you’ll find easier approval for a loan, it does increase your pool of options.
Compare the handful of products provided by the physical banks in your town versus the number of loans that come up with these keywords: easiest loans to get online. In the blink of an eye, your search engine will deliver thousands of potential options.
With a bigger selection, you have a greater chance of finding qualifying criteria you can satisfy on your own. You also increase your chances of finding a better deal on rates and terms.
A good cosigner can be hard to come by — not to mention how financial matters can sour a good relationship between friends and family. If you need fast cash in an emergency, consider searching for short term personal loans online instead.