While you might ask someone to co-sign on an auto loan with the best intentions, co-signing an auto loan is extremely risk for the co-signer's finances. Putting your name on the same loan note as anyone immediately gives him a new liability that he may never be able to shake unless you pay off the debt. If you need help getting a car loan, there are other ways doing so.
Auto Loan Co-signer
The best place to look for a co-signer is someone close to you, such as a friend or family member. However, you should inform them of the risks of co-signing a loan even though federal law requires lenders to this anyway. Once a person co-signs an auto loan, he may have to repay the debt if the lender pursues him for it. If you miss a payment, this negatively affects both of your credit histories.
Joint Applicant
You might have more success asking someone to be a joint applicant on a car loan. A co-signer has no right to repossess the vehicle even if you default, but a joint applicant has full rights to the car. The disadvantage of becoming a joint applicant is that the other party has the same liability for the debt as a co-signer and may have some extra responsibility, such as paying insurance on the car.
Considerations
In general, a co-signer on an auto loan needs to meet all of the requirements of a regular applicant. Thus, if you find a co-signer, he should have a good credit rating--at least a 600 to 620--and monthly debt payments that do not exceed 33 percent of his monthly income. The lender may ask for collateral even if you have a co-signer with good credit and a low amount of debt.
Tip
You may be able to obtain a car loan without co-signer, especially if you have a large income, low debt and agree to a put up thousands of dollars for a down payment--20 percent as a down payment usually gets you the best rate on a car. If you go with a co-signer, you may be able to offer him extra protection by drafting a contract between you guaranteeing payment. The lender also might limit a co-signer's liability, such as limiting his guarantee to a certain portion of the car's value.
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