Can I Co-sign for Multiple Cars?

You can co-sign for multiple car loans as long as your credit is in good standing. Your income must also be enough to afford the payments of the loans you sign for. However, co-signing for one loan presents risks, let alone signing for several. Before you co-sign for multiple loans, consider the risks involved.

Debt-to-Income Ratio

Your ability to co-sign for multiple loans depends on your debt-to-income ratio, which banks used to determine whether you can afford the car payment you apply for. The lender checks your credit to view any revolving credit and debts you currently have. Based on the information you provide in your credit report, the lender also uses your income and time with employer to gauge whether or not you can afford multiple car loans. If your income is sufficient and the amount of your debts and car loan are compatible, you can co-sign more than once.

Your Responsibility

Because you need good credit to be able to sign for a car loan, co-signing for people who do not have good enough credit to obtain their own loans posses substantial risk. It is your responsibility to pay for the loan if the person you sign for misses a payment or becomes past due. Also, late payments are reported on your credit report, not just the main borrower's. Constant late payments or a repossession can significantly damage your credit rating.

Dealer Tricks

Sometimes dealerships know you will not qualify for an approval on two loans at the same time, if you're buying the vehicles at the same time. In such an event, the dealer may send your credit application into two separate banks at once so that it appears you are purchasing one car, and not two. It takes a few days for your loan to go through, so neither bank will be aware of your intentions. Do not allow the dealer to do this. If you cannot afford the car payments of the vehicles you're co-signing for, you will not be able to stop a repossession.

Future Expectations

Adding new, multiple lines of credit to your credit report will affect your credit score, future loan approvals and interest rates. For example, two $15,000 car loans put you in $30,000 of debt, which is unattractive to lenders. You may not be able to trade in your own car for another because of this. Or, if the people you are co-signing for default on their loans, it can cause new account interest rates to soar if you apply for credit again. Carefully consider your future lending needs and whether you trust the people you are co-signing for.