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Who is a co-signor? Why consider it for a Car Loan applications?

Car ownership confers several benefits, travel convenience and comfort being the most prominent ones. Owning a car is also beneficial during emergencies. If a family member experiences cardiovascular symptoms, you can immediately rush them to the hospital without having to wait for the ambulance. Reaching the hospital in time may save your loved one’s life. Typically, you have two options when you wish to buy a car.

You can either buy a new or used car. The popularity of used cars is increasing among four-wheeler buyers because of their affordability. You can buy a good-conditioned car at a fair price. Consider applying for a Loan to finance your used car purchase. It lets you borrow lumpsum amount at competitive Used Car interest rates. You can repay the borrowed amount in equated monthly instalments spread across your opted tenure.

Car Loans are a common credit facility that almost all reputable banks offer. Hence, you can apply for a Loan with any preferred bank. You can apply for a Loan with a co-signor.

Who is a co-signor in a Car Loan application?

A co-signor is someone who signs the Loan application with you. They guarantee timely Loan repayment and take responsibility for the repayment in case of default. As per the bank rules, any person cannot be a co-signor for your Loan application. The bank requires either a family member or a friend as a co-signor for your Loan application. Furthermore, the co-signor should fulfil the eligibility criteria as the primary applicant.

The procedure to apply for a 2nd Hand Car Loan with a co-signor is the same. You need to fill out the Loan application form and submit your and co-signor documents to apply for a Loan. The bank reviews the application and decides the approval and, subsequently, the Loan amount and interest rates based on your eligibility.

Benefits of a co-signor for Car Loan application

  • Improves chances of Loan approval

As mentioned, the bank considers your eligibility for Loan approval. Your overall eligibility gets a boost when you apply for a Loan with a co-signor. Hence, this improves your chances of Loan approval. A high income and excellent credit score are crucial for quick approvals.

  • Helps with the lowest interest rates

Besides the Loan approval and amount offered, your eligibility impacts the interest rates the bank extends. Your credibility increases when you have a co-signor on board. Hence, the bank may provide a Loan at competitive interest rates.

  • Makes you responsible

You become more responsible towards the Loan repayment when you know it is not just you but the co-signer’s reputation at stake.