Will co-signer help or hurt me?

[butters149]

Hello,

I have a question.  I plan on getting an auto loan for around 30K for a 32K car, either through Capital One or PenFed in March/April.  I applied last September with a co-signer and was approved for 29K at 17%.  My credit was around 550 back then with a 99% utilitization right (just started a job) and her credit I'm sure is shot too.  But applying with her gave me a higher credit limit.  I made around 41K and she made around 50K back then.  

Fast forward to 2014.  I have about 70% utilization right as of this past week, and will be 5% by mid-February.  My new income is $55k and my co-signer is still at $50k.  My current score according to scorewatch is 582 (score has not updated and still shows a 99% util rate).  

I need an advice, since my score will probably jump past 600, hoping to get to 630-650 and with a downpayment of $5-6k, will adding her on as a co-signer make my loan amount and interest rate worse?  This is for capital one or penfed.  I dont plan on applying too much because I don't want alot of inquiries. 

Thanks,

[CARDEALWIZARD]

Not sure about Pen Fed, but at cap1, it will help if you live at the same address as the cosigner.  If you live at the same address cap1 will combine the total monthly income, and one of the factors cap1 uses to determine the rate is Payment to INcome (PTI), the combined income will also help the dti which also affects the loan rate.  The downpayment will aslo bring the Loan to value dow (LTV) and that is another factor cap1 uses to determine the rate. Modcut

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Shogun, myFICO moderator

[butters149]

She doesn't live with me, however if I do have another person live with me, wont they take the lower income to determine?  Or does that imply to only co-signers living at different addresses?  

[CARDEALWIZARD]

Yes you are right, they will combine the income if you live together, and take the lower income if at different addresses.  Modcut

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Shogun, myFICO moderator

[butters149]

btw, is it me or do dealers seem to approve sub-prime more for new cars than used cars?  

[CARDEALWIZARD]

Thats not really the case.  Sometimes the new car lender's like Honda finance, GMAC, KIA Motor Finance, Nissan Motor Accep. (NMAC), Ford Motor Credit (FMC), etc. will be more forgiving with bad credit if you are willig to buy a new car, they just want to move their brand.  Another factor is Loan to Value, dealers can usually give a better deal on a new vs. used and this will mke the loan to value (LTV) more attractive to the bank and can make the required down payment lower, since the custoemr is getting a great price and the LTV is in-line.  However, sub-prime auto loans on older car (7years or older) and with high mileage, are very hard to obtain. Modcut

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Shogun, myFICO moderator