Does my credit matter with a co-borrower?

Anonymous · ‎06-09-2016

Basic situation, in credit recovery after student loans finally fell off about 18 months ago. High 500s, low 600s depending on model. One student loan still showing in collections on Experian (no longer mine, but they refuse to remove it) and one public record showing with all 3 bureaus. Recently moved from city to a place where I actually need a car, financing search with just my name applying was a disaster. First time buyer, simply because I've lived in public transpo heaven since college.

Family member with impeccable credit can cosign, but is retired so shows nothing but social security/pension income.

tl;dr question: Does my credit matter with the co-signer? I would be the primary borrower. My plan has been to suffer through the summer without a car while focusing on paying down my CC utilization, which simulations say should hopefully bring me up to at least 620-30. But if my credit isn't even going to be that determinative, and my co-signer's stellar FICO will be what matters, I don't want to wait because having a car in an area where even the grocery store is 20 miles away is godawful.

The bummer is my pre-move financing search turned out to be a wash, but it stacked more than a dozen inquiries on my reports by the end of it all. So I don't want to go through another round of that if it turns out my score IS still going to be determinative.

Thoughts?

Anonymous · ‎06-09-2016

Yes, your credit counts too.

In fact, you may find that if you cannot secure your own financing at any price, you may also not be approved as the principal buyer - the lenders may require your cosigner to be the principal/primary, with you as secondary. That depends on the policies of the lenders, though.

Your credit will absolutely factor into the decision. You will have a higher than prime interest rate, no matter the credit score of your cosigner, if your credit is too low for prime rates. You can get approved this way, when you couldn't on your own, but you'll still not be considered a prime borrower even with a cosigner. It'll be better than it might be on your own, rate-wise, but still higher than you might expect to get with your cosigher's score alone.

Your credit rating can also greatly affect your insurance costs, so be sure you've shopped full coverage insurance in your area with your credit score before you get a bad surprise after purchasing the car.

GalaxyStars · ‎06-09-2016

Yes. I've even heard of some rare instances that even with a Co Signer they decline the loan, because the primary buyers credit is still too big of a factor not to overlook.

Basically requiring them to be put as the Primary, meaning your car would technically not be your or fully yours.

Anonymous · ‎06-09-2016

Ugh, what a bummer. So there's no effective tier increase at all? The truth is I don't even really want to own a car, I don't plan on living outside the city for longer than 3-4 years. A lease would be perfect for me (even cheaper payment wise) but I absolutely would need a co-signer to be bumping me up several tiers for that. I had a fantastic deal worked out with bestbuyautoleasing, $218/mo for a 2016 Sentra. But somehow our lines got crossed and they expected I'd be borderline but doable, turns out the dealer they spoke with was like "I'm not even going to run this, he won't qualify on his own." Ugh.

I have been approved at several places on my own for buying, but it's all very sub-prime, rates that would have me paying nearly $400 a month for a bargain basement Versa or somesuch, just not acceptable. I was really counting on the addition of a co-signer being able to resolve that while my credit climbs over the next year.

*edit* I should note that my co-signer's auto FICO is undoubtedly even more stellar than the standard FICO, she's got decades of impeccable car history under her belt. I *think* all financed/owned, but there might be some leasing in there.

GalaxyStars · ‎06-09-2016

Well no one's saying for sure that you won't get a great rate. Of course having a co signer will help to some extent.

Just saying there are some cases in which a co signer doesn't resolve all the issues with a loan.

Anonymous · ‎06-10-2016

Sorry to say if this sound harsh. Your credit is low and u want prime rate? You need to start building somewhere unless u never plan to own a house. Getting 10-15% interest on a 20k loan isn't bad to rebuild credit. Now imagine getting 10-15% on a 200k plus loan for a house. I'll say get a co signer do ur loan and be happy with whatever rate u get. Just make sure the loan will be reported on ur credit too. While ur at it get a few credit card (3+)

Anonymous · ‎06-10-2016

I never said I want a prime rate, but I'm certainly not going to tolerate luxury car-level payments for what should otherwise be the cheapest monthly economy car. It's not like I'm trying to worm my way into a BMW here, so the moralizing isn't really necessary. I understand precisely why my credit is the way it is, and the entire reason I need a car to begin with is that I made the responsible decision to acknowledge that my city had outstripped my income over the last 10 years re: cost of living and moved. A car payment is 100% a part of my credit rebuilding plan, but that doesn't mean I'm going to pay out the nose for it if I don't need to.

It's not like I've got an apocalypse of a credit history and want to bounce back immediately (though I'll note these boards are filled with people successfully doing exactly that). I simply started from a low floor due to student loan debt that's since fallen off, and now have a couple thousand in credit card debt that will be wiped by the end of the year. There's nothing insurmountable there, I'm just trying to figure out how quickly it's worth trying to convince a decent lender of that.

Anonymous · ‎06-10-2016

Don't forget the power of refi...

If you get into a deal that you don't particularly like, but can live wtih short-term (like, 6 months or a year), then you have time to pay down those debts you're already planning on and improve your file (add a card or two, maybe, or something else to boost your profile) and then refi with just your name, at a more satisfactory rate, because your score will be better by then. If you need a car because you don't have access to transportation anymore, then you need a car, and you have reasonable goals. Just don't think of your original contract as being a permanent thing - with the work put into improving your scores you can shop for a refi to improve terms and/or release your cosigner.

Anonymous · ‎06-11-2016

@Anonymous wrote:
I never said I want a prime rate, but I'm certainly not going to tolerate luxury car-level payments for what should otherwise be the cheapest monthly economy car. It's not like I'm trying to worm my way into a BMW here, so the moralizing isn't really necessary. I understand precisely why my credit is the way it is, and the entire reason I need a car to begin with is that I made the responsible decision to acknowledge that my city had outstripped my income over the last 10 years re: cost of living and moved. A car payment is 100% a part of my credit rebuilding plan, but that doesn't mean I'm going to pay out the nose for it if I don't need to.

It's not like I've got an apocalypse of a credit history and want to bounce back immediately (though I'll note these boards are filled with people successfully doing exactly that). I simply started from a low floor due to student loan debt that's since fallen off, and now have a couple thousand in credit card debt that will be wiped by the end of the year. There's nothing insurmountable there, I'm just trying to figure out how quickly it's worth trying to convince a decent lender of that.

I recommend going into a credit union with ur co signer and see what a credit union can do for u. U might be able to get under 3%