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Why do I need a co-signer for a car loan?
My wife says she needs to co-sign on my car loan, but I don't understand why. What are the reasons to get a co-signer?
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
You may need to get a co-signer if you have bad credit or if you don’t meet a lender’s income requirements.
Co-signers on
car loans
can be used to boost your credit if both you and your co-signer separately meet the minimum income and debt-to-income (DTI) ratio requirements set by your lender. This usually means that you’ll both need:- A minimum income of $1,500 to $2,000 per month before taxes
- A DTI ratio of less than 45-50%
If you don’t meet your lender’s income requirements, your spouse can co-sign to get you approved. The incomes of two married people can be combined into one, so you won’t have to individually meet the income and DTI requirements.
When you buy a new car, you need to update your insurance policy, too. The
Jerry
app can help by collecting insurance quotes for you for free, so you can compare rates and coverages from over 50 top insurance companies in a matter of minutes.View full answer
- Gregory R.
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