Scoring a co-signer for your new wheels

Young woman in new car with orange sunglasses
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Scoring a co-signer for your new wheels

Ubering? Over it. Cruising with the squad in your new wheels? Yes please.

If buying a car is next on your adulting list, there are a few things you’ll need: 1. Some cash for a down payment. 2. A car that fits your aesthetic. 3. A co-signer.

Until you’ve built up your credit history, get ready to finesse a parent or other adult into co-signing on a car loan for you. Before you do, it’s good to know what you’re really asking. Here’s what you need to know about co-signing on a loan:

What’s a co-signer again?

If you’ve taken out a student loan or signed a lease, you may have already had to get a co-signer. That’s someone with good credit who can vouch for you until you’ve had time to prove your own creditworthiness. As your co-signer, they’re agreeing to take equal responsibility for the debt in case you default on your loan.

Co-signing is a fact of life when you’re still building credit. Two in three adults under 35 have needed a co-signer in the past, and 77 percent are convinced their parents will have their backs in the future. But it’s not something to ask for lightly.

How big of a deal is it?

If your co-signer-to-be seems cautious about the idea, that’s to be expected. Asking someone to co-sign a car loan for thousands of dollars is a big deal. When someone co-signs for you, they’re fully responsible for the debt if you don’t pay.

It usually works out. Just 8 percent of co-signed contracts are in bad standing—mostly because of missed or late payments. Of those:

  • 32 percent of co-signers had to make the payments themselves.
  • 17 percent didn’t find out right away.
  • 12 percent took a hit to their credit.
  • 7 percent ended up taking on the whole debt.

Who can be a co-signer?

A co-signer doesn’t have to be a parent. Some people turn to their friends when they need help getting a loan. If you’re the financially savvy one in your group, someone might ask you to co-sign for them—especially once you’ve built credit with your own car loan.

What would you say? We all want to help our friends, but co-signing a loan is a big risk. You’d need to really chew it over before putting your credit on the line.

I’ve got my loan. Now what?

When someone agrees to co-sign for you, the last thing you want is to sour your relationship by dropping the ball. More than half of young borrowers worry about hurting their co-signer’s credit score.

But you’ve got this. The rules are simple:

  • Choose a car you can afford to keep.
  • Always make your loan payments on time.
  • Set up auto-pay so you never forget.
  • Follow a monthly budget so your payment is always covered.
  • If you come up short, call your lender ASAP and work something out.

As long as you’re responsible, having a co-signer who’s willing to vouch for you can give your credit a real boost—not to mention help you score some sweet wheels.