Purchasing a vehicle for your family or business usually requires a loan. Sometimes, if you are a single borrower, you may need a better credit score or loan-to-debt ratio to qualify for a favorable rate. Choosing a cosigner or joint auto loan can grant you access to a larger loan with a lower interest rate. While cosigner and joint loans are similar, they have several key variations that make them ideal in different situations.
A joint auto loan is an option that allows two people to borrow money for a vehicle and share the benefits and risks. Both borrowers list their names under the loan, meaning they can both access the funds.
The borrowers are also responsible for payments during the auto loan’s term. They can form a private payment agreement as long as the lender receives full payment on time each month. Joint borrowers share proceeds upon the vehicle’s sale.
Lenders consider both borrowers’ credit scores when considering joint auto loan applications. The borrowers must qualify for the lender to approve the loan. Payments, or the lack of payment, affect the borrowers’ credit scores.
A cosigner auto loan is a lending agreement that supplies funding to a primary borrower with a cosigner’s support. Using a cosigner on an auto loan allows the primary borrower to qualify for a loan or receive a lower interest rate.
The primary borrower assumes ownership of the vehicle and is the first person responsible for monthly payments. The cosigner is accountable for the balance if the primary borrower defaults. However, the primary borrower takes full ownership of the vehicle and receives all proceeds if they sell it.
Lenders approve cosigner auto loans according to the cosigner’s credit. The primary borrower’s credit and income play a role in the final decision, but the cosigner’s standing bears the most weight.
Joint and cosigner auto loans are actionable resources for groups that want to share financial responsibility for a vehicle loan. However, there may come a time when you want to refinance your loan under a single name or add a name to your personal loan. RefiJet simplifies the process of refinancing auto loans. We invite you to find out if you are eligible for auto loan refinancing today!
The vehicle title is the legal document that is the state’s record of who owns the vehicle.
