If you want to become a cosigner do not just jump into the situation. You need to make sure that you know exactly what it means/how you will be involved and that you are ready to make that type of a commitment. Becoming a cosigner though will be a lifesaver to someone who needs a bad credit used car loan and if you are willing and able to make that kind of commitment and lend them a helping hand then it will be greatly appreciated by them.

Who Needs a Cosigner

When you pull up your credit report and it makes you cringe, then you will probably not be able to take out an auto loan on your own. In this case you will need to find a cosigner or a cobuyer and who has an established good credit score.

If you are looking to become a cosigner/cobuyer or you are looking to find one then you should be aware of both the similarities and the differences.

Similar:

1. Either one along with the primary borrower are going to be held equally responsible for the loan. This means that if the primary borrower is unable to uphold their financial responsibility that it will become your responsibility.
2. Both types will be signatories on this loan. This will require them to sign the loan documents, since their name will appear on the contract.
3. If the loan goes into default, they will be subject to collection action.
4. By being a cosigner or cobuyer you will be subject to a credit review during the credit review process.

Differences:

1. Cosigner and cobuyer will be classified according to their income in relation to the primary borrower.
2. Cobuyer's income can be added to the primary borrower's to meet the lender's income requirements.
3. Cosigner's income on the other hand can not be added to the primary borrower's income. This means that both primary borrower and cosigner must meet the lender's income requirements separately.

Additional Information and Responsibilities

A cobuyer typically needs to be someone very closely in relation to the primary borrower. In most cases this situation is going to be among couples, while parents or grandparents would become cosigners.

Make sure that you think long and hard before you make any final decision about becoming a cosigner or a cobuyer. This is a huge financial decision that very easily will affect you and your life. If the primary borrowers get behind on payments then you will be equally as responsible and will need to hand over the cash. This can set you back financially over a vehicle that you probably have never even driven.

You might want to suggest to them an option if you are not exactly ready to make this type of commitment. Ask them why they don't get pre approved for bad credit financing online right here at FundingWay.com. We have the best resources in the country and can help anyone who has a damaged credit score be able to get the financing that they so desperately need. If it is possible to get you financed no one will be able to do it better than us.