Dear Driving for Dollars,
Can having a co-signer with an excellent credit score help a buyer get a better interest rate for a buyer with less-than-good credit?
Yes, depending on the lender, a co-signer can help a buyer with lousy or even so-so credit get a better interest rate or even go from being denied to being granted a loan. Keep in mind though, people who are considering co-signing for an auto loan should read the loan paperwork carefully and make sure they fully understand what they are agreeing to do. The role of a co-signer is to assume responsibility for the payments if the other signatory defaults. Make sure that the loan states that the co-signer will be notified by the lender if a payment is late or is missed, as that could affect the co-signer’s credit score.
If you have a car question, e-mail it to us at Driving for Dollars.