Establish credit by co-signing a car loan?

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Dear Driving for Dollars,
I need to buy a car and don’t have much of a credit history. I was told I should get a co-signer for a car loan. My sister is considering co-signing for me. If she does, which one of us gets the credit history for the loan and who actually owns the car?
— MeeMee

Dear MeeMee,
Buying a car is a major purchase, and if you don’t have much of a credit history, you may indeed need a co-signer. But if you have a steady job and little debt and you are not looking to buy a very expensive car, you may be able to get auto loan approval on your own. Inquire at a few banks or credit unions about getting a loan on your own, and compare the interest rates to that if you get a co-signed car loan with the same lender to make sure it’s a good decision. Both types of lenders are likely to offer you a better interest rate than a dealer would.

If you do end up with a co-signer on your auto loan, the loan will appear on both of your credit reports and will note if your payments are on time or late. Your co-signer will be responsible for the car loan should you become delinquent. As far as the ownership of the car, this depends on how your car loan and your car title are written when you make the purchase. Discuss that with the person creating the paperwork.

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