A car leasing company may pass on your application if you have no credit history or a bad credit history. But adding a person to the lease agreement can get your application approved, and quickly put you behind the wheel of a new automobile.
What is a Co-signer?
A co-signer is a person who promises to manage the lease payments if you default. Leasing companies are particular about whom they approve for financing. Someone with a horrible payment record or no credit history can run into problems and have the application rejected. By adding a qualified co-signer, leasing companies feel confident that they will receive lease payments. The primary lessee is obligated to forward payments to the leasing company, but if this person cannot fulfill the obligation for whatever reason, the co-signer steps in to settle the debt.
Credit Qualifications
Since a primary lessee usually cant qualify for financing due to an unstable credit history, it makes sense for the co-signer to have a better credit history. Leasing companies decide whos eligible for a lease by reviewing credit scores and history. Expect the leasing company to take the name and Social Security number of you and your co-signer, and then conduct a thorough credit check. Leasing companies pay attention to how well the co-signer pays his bills, and whether he has delinquencies or a bankruptcy in his recent past.
Income Criteria
A person with no income or employment cannot co-sign a lease agreement. The person chosen to co-sign the lease must demonstrate the ability to make lease payments if the primary lessee defaults. Leasing companies take numerous factors into account, such as the co-signers monthly income and his amount of present monthly debt payments. A co-signer thats already overextended is likely a bad candidate for the lease.
Considerations
Co-signing only benefits the primary lessee because hes able to qualify for a lease with another persons help. Quite the contrary, co-signing a lease puts the co-signers credit in jeopardy. The leasing information appears on both parties' credit reports, and if the primary lessee makes a payment late or skips a payment, the co-signers score can drop. Co-signers can take extra precautions by staying in communication with the leasing company and arranging for the leasing company to contact him the first time the lessee misses a payment.
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