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What are the Advantages and Disadvantages of Getting a Cosigner? | OK Carz

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Cosigning Pros and Cons for Car Loans

For many borrowers, cosigning is a fantastic option to consider. However, it also presents some dangers and risks. So, what are the advantages and disadvantages of getting a cosigner? Here, we will explore the pros and cons for cosigning a car loan.

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Benefits of Cosigning

Makes getting accepted for a loan much easier as there are two people signing the contract.
Can potentially get a lower interest rate.
Gives the borrowers a chance to improve their credit score.

Risks of Cosigning

Credit is at stake for both cosigners.
If one person fails to pay, the other signer is pressured to pay the other person’s part to protect both of their credit scores.
Relationships can be tarnished if one of the cosigners aren’t responsible with their payments.
If one cosigner is regularly taking advantage of the other, the other person cannot back out of the contract. Legally, they are bound until the loan is fully paid.

Remember that cosigning is not for everyone and it requires a serious conversation with the other potential cosigner. There should be full trust between both parties before moving forward. For instance, cosigning is a great option if a parent is trying to help their son or daughter. This may not be recommended among two friends.

Need more advice on financing for a car loan? Check out the OkCarz blog for more tips. Want to speak with one of our expert financial representatives? Contact our team through our website or over the phone and we will be happy to schedule a meeting with you.