Establish (or Improve) a Credit Rating with "Co-signed" Loans

 
Are you having trouble getting approved for a car loan?  A quick solution could be to get a co-signer.  If lenders reject a car loan application with just you on it, most can provide a "co-signer" option, where the loan is placed in your name and someone else’s name (if they agree to become your co-signer). 

If you have no credit history, or if the history you have is a bad one, you can build a positive credit rating with a co-signed loan.  The key here is to make required payments on time and in the full amount specified.  Any loan with your name on it, regardless of who else is on it, will help your credit rating as long as it is paid on time.  Establishing credit in your name through this type of loan (installment loan) is an excellent way of demonstrating both your ability (sufficient income) and willingness (adherence) to pay over time as promised. 

Lenders are willing to provide these loans because the co-signer is obligated to pay the loan in case you don’t.  They are much more apt to lend to someone who has a co-signer than to someone with no credit, or to one with bad credit.  You could just ask the same (co-signer) person to directly apply for a car loan to help you buy a car, but then you wouldn't get the benefit of establishing (or improving) a credit rating in your name.  If you default on the car loan payments, your co-signer then becomes responsible for your m

If neither of you pays, both credit histories will take a serious hit, and the lender will repossess the car.  That will also pretty much keep you from getting another car loan, or any other financing, in the future.  It’s like breaking a mirror: you get seven years bad luck.  If you don’t pay your car loan, it will take about seven years before a bank will take the risk of lending to you again.  Even if you are making "big bucks," once you have defaulted on a loan, the bank won’t lend to you--or, if they do, it will be at the highest rate Pennsylvania will allow: 21%. 

Your past will come back to haunt you.  Although it may seem delicate and risky, a "co-signed" financing strategy is completely safe as long as you pay on time.  Then your next car loan might be in your name only, since you will have proven that you are a good customer who pays on time.