December 1st, 2010 
Kathryn Evans 
When going for first time car financing, the borrower should be ready to face rejection or a high interest rate on the application. This happens because the interest rate is synonymous with the credit score of the applicant and if the credit score is low the interest charged is high. In these cases however, the credit score is nil or very low which means that the borrower has never taken a car financing or any other sort of loan before. This lack of credit history is confusing for the lender and they usually let the case go by to avoid risking the finances.
However, bringing a cosigner can ensure that the car financing can be approved even if the person is new to the lending industry. A cosigner usually has a prime credit score which means it is in the range of 700 or near it as the lender don’t agree for cosigners below this range. Anyways, the cosigner acts as a guarantee to the car financing and the lender is assured that the loan amount would return because the cosigner has put his/her credit score on the line. In case of default the credit score of both is reduced which can negatively affect the future of both the cosigner and the applicant.
However, it comes with its benefits too because lenders are ready to deal with applicants who bring cosigners to get decent interest rates even when the borrower doesn’t have a credit history. The cosigner also gets a benefit as the successful payments on the car financing would result in an increase of credit score for him/her. Although this benefit really doesn’t matter to one whose credit score is already high but it can be a major factor if the cosigner faces some sort of financial misfortune and his/her credit score is going to be reduced.
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Tags: Car Financing, Financing, Time Car, Time Car Financing