Whose credit score is used when buying a car with a cosigner?

credit score joint auto loan, joint auto loan, joint car loan, joint credit

When you buy a car with a co-signer, the lender will look at both credit scores to determine eligibility. 

Being a co-signer is a risky financial move. As many as 3 out of 4 primary borrowers default on their obligations!1 If you are considering becoming a co-signer or asking someone to co-sign, it’s critical to communicate about repayment expectations. 

Keep reading to learn more about auto loans and better understand the difference between a co-borrower vs. a co-signer.

Why Do Lenders Look at Both Credit Scores for a Joint Auto Loan?

When two people agree to a joint car loan, they agree to split the monthly payment. And so, because both people are responsible for a portion of the payment, the lender will weigh both credit scores. Looking at each co-borrowers’ credit score will allow the lender to assess the risk they are taking on and plan the loan terms accordingly.

What Are Some Benefits That Come With Joint Auto Loans?

Here are some of the main benefits that can come from having a co-signer loan:

Income Requirements 

Let’s say you apply for a car loan but don’t have enough income to meet the requirements. A joint auto loan means that the lender will add the other person’s income to the application. This addition can help you get approved if your income falls short.

Can Make Repayment Easier 

With the split responsibility of the auto loan, the monthly payment will be much easier to handle for each person than going at it alone.

Getting Funded Even With Bad Credit 

As mentioned above, with a joint auto loan, a lender will consider both applicants’ credit scores. A joint car loan could be a better option if you have poor credit compared to a single auto loan (depending on your co-borrower’s credit score). If your co-borrower or co-signer has a positive credit history and their credit score is higher than yours, your chances of approval go up! Even with a second bad credit score, the added income could definitely help you qualify!

A Joint Auto Loan Keeps Things Fair 

If you are going to be sharing the vehicle with a co-signer, it seems fair to have both parties take on the costs of having the car!

Paying Off the Car Quicker 

With two people having to make payments, you may be able to pay off the loan faster (also dependent on the loan terms). This speed can be a huge advantage to save on interest rates. And can even help boost both credit scores once you pay off the loan! On-time payments can also positively impact your credit score and credit history. Learn more about the various tips to pay off debt faster to quickly own your car outright. 

A Few Things To Consider With a Joint Car Loan 

You will want to consider many factors before you sign up for a joint loan with someone else. 

Financial Responsibility

Think about whether you want to share financial responsibility. If a co-borrower misses loan payments, it can impact your credit score. Having a loan default can be even more devastating on a credit score.

Vehicle Sharing

With a joint loan, both co-borrowers will have legal ownership rights over the car. These installment loans typically work best for co-borrowers who are life-partners or co-habitat and share household income and expenses.

Interest Rates

Make sure to check out various lenders together and by yourself to find the better interest rate. That way, you can rest assured you aren’t paying more in interest than the vehicle value!

A Co-Signer vs. A Co-Borrower 

Although a co-signer sounds similar to a co-borrower, they play two different roles with secured loans. Take a look at some of the key differences below between a co-signer and a co-borrower.

Role in LoanActs as a guarantor and agrees to repay the loan if the primary borrower defaults.Jointly applies for the loan and shares equal responsibility in repayment.
Credit HistoryLenders may require the co-signer to have a strong credit history as a good  score provides added security.Co-borrowers’ credit histories are combined to determine loan terms; one strong profile can help compensate for another’s weaknesses.
OwnershipTypically, co-signers have no legal ownership of the asset financed by the loan.Co-borrowers usually have shared ownership of the asset involved.
LiabilityCo-signers are liable for the debt if the primary borrower fails to make payments.Both co-borrowers are equally liable for making loan payments, regardless of who uses the asset.
Credit ReportThe loan appears on the co-signer’s credit report, and any default by the primary borrower can negatively impact the co-signer’s credit score.The loan appears on both parties’ credit reports, and both are impacted by the account’s status.
Primary BorrowerThe primary borrower is the main individual responsible for repaying the loan, but the co-signer guarantees this repayment.Both parties are considered primary borrowers and share equal responsibility for repayment.
Financial BenefitA co-signer does not receive direct financial benefits from the loan but helps others obtain financing.Co-borrowers can both benefit from the asset and potentially improve credit scores through timely payments.

Can I Remove Myself or the Other Person From a Joint Auto Loan? 

If you take out a joint car loan but decide that you want to change things, consider two options. One would be simple, paying off your portion of the loan works. On the other hand, refinancing your auto loan can be an option if you want to transfer the loan to a single person. 

Since joint auto loans usually involve a significant other or someone who is contributing income to the same household, the following method may make the most sense to most borrowers:

The co-borrower who wants to take on repayment can go to a loan lender and get a new loan. 

They can apply for another car loan, a personal loan, credit card, or even apply for a bad credit loan option with a low credit score. Bad credit loans are available, although they tend to have higher interest rates. If they qualify, they can use that new loan to pay off the existing joint auto loan. Through this, the initial loan agreement will no longer stand.

People refinance loans for various reasons. In some cases, refinancing offers lower interest rates (for borrowers with a good credit score), a larger loan, and other factors that make debt management more accessible.

Can I Have More Than One Joint Loan? 

Like other forms of credit, you can apply for funding from an additional joint loan after taking out your first one. Keep in mind the same rules that impact a singular loan will apply to a joint loan, with the addition of your co-borrower’s payment habits. Learn more about how to manage debt wisely before signing up for multiple loan types and lenders.

Joint car loan financing offers those with limited income and a poor credit score to get the funding they need to buy a new car. Adding a co-borrower shows more income, and even with poor credit could increase chances for loan approval.

FAQs About Joint Auto Loans 

How do on-time payments on a joint auto loan affect my credit history?

Making on-time payments is crucial as it positively impacts your credit history. Both parties’ payment history gets recorded, so punctual monthly payments can help boost both your and your co-signer’s credit.

Can one party make extra loan payments to pay off a joint auto loan early, and how does it reflect on both credit reports?

Absolutely, either party can make extra payments! While the primary borrower is usually the one making payments, both parties benefit from paying off the loan early. It reflects well on both credit reports, showing responsibility and the ability to manage debt effectively. 

What happens if the co-signer has bad credit? Will it affect the approval chances of a co-signed auto loan?

If a co-signer has bad credit, it might pose some challenges. Lenders look at both parties’ credit history to determine the risk. However, if the primary borrower has strong credit, it could balance things out. It’s all about finding the right fit for your financial situation!

If I’m the primary borrower, will the loan payments be split between me and my co-signer, or am I expected to make the full monthly payments?

As the primary borrower, you’re typically expected to make the full monthly payments. However, the terms can vary based on your agreement with your co-signer. Clear communication is key to keeping things smooth.

Can late payments or default from the co-signer affect my credit score even if I always make my payments on time?

Unfortunately, yes. The payment history of a joint auto loan reflects on both parties’ credit reports. So, if the co-signer makes late payments or defaults, it could negatively impact your credit score, even if you’re always punctual. It’s like a financial partnership, so choose your co-pilot wisely!

How can I monitor the impact of a co-signed auto loan on my credit report?

You can monitor your credit report through various credit bureaus or credit monitoring services. Regular check-ins will help you see the effects of your joint auto loan, including payment history and overall debt. 

What’s the process for removing a co-signer from a joint auto loan if relationships change?

If you need to remove a co-signer, you might consider refinancing the loan solely in your name. This requires a new credit check and might change your interest rate, but it’s a common solution when circumstances change. Just remember, it’s always good to part on friendly terms!

Takeaway Message From CreditNinja on Joint Auto Loans

If you are considering using a co-signer or co-borrower to get a joint loan, you may be wondering which credit score lenders use for these loans. The answer is that there will be a hard credit check done to each applicant. Although you may not need a good credit score to qualify for auto loans, as every lender has different credit requirements. 

If you’re worried about your credit score, know that there are ways to improve it! CreditNinja offers informational online articles that answer various questions, such as, “How to pass a credit check with no credit?” and “How to get a car with no credit or co-signer?” 


  1. Why You Should Never, Ever Cosign a Loan for Anyone │ The Atlantic 
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