For a number of reasons, personal loans can be an important component of your financial planning. Maybe you’re trying to consolidate your debt or pay off some credit cards. If you can get approved, a personal loan may be a good way to help you achieve your goals.
Personal loans are based more on your creditworthiness as a borrower and do not require collateral like auto loans or mortgages. If you have a poor credit history, that can complicate matters a bit, which is why a cosigner is necessary.
If you apply for a personal loan or installment loan with a cosigner, you may be able to obtain a loan that you would not be eligible for on your own.
Best Personal Loans With Cosigners
While many newer online loan providers do not require a cosigner, traditional lenders frequently do. Before applying with an online lender, you should ascertain whether they will accept a cosigner.
Here are some of our top recommendations for cosigner-friendly personal loan providers from our partners. The fact that none of these lenders imposes application fees or prepayment penalties should be noted.
| Company | APR | Loan Amount |
| LightStream | – * with AutoPay | – |
| Upgrade | – | – |
– * with AutoPay
Low-rate personal loans with cosigners are available from LightStream, and as part of their Rate Beat program, they will match any rate a rival offers by 0 percentage points. 10 percentage points. Depending on the loan’s purpose, rates may change, but there are never any fees. LightStream is an excellent choice if your credit is excellent or good.
Since Upgrade has a lower minimum requirement than most lenders, it is a good option for borrowers who need smaller loan amounts. Compared to other lenders, eligibility is more dependent on free cash flow.
A good place to start looking for an unsecured personal loan with a cosigner is at credit unions. The majority of the time, they are owned by their members, and they are nonprofit lenders that are typically managed locally.
They can frequently work more closely with you to find a loan option that works because they’re not banks, and they’re more likely to accept a cosigner if you have one in mind.
>> Read More: Credit Union Personal Loans
When Would You Need a Cosigner for a Personal Loan?
The minimum credit score needed for a personal loan or installment loan varies depending on the lender, but for the majority of conventional lenders providing unsecured loans, a score of between 580 and 600 is typical. Some lenders won’t go below 620. Your chance of approval increases with your credit score.
Although there are many different scales for credit scores, they typically range from 300 to 850, with 850 being the highest FICO score that is offered. Anything over 700 is regarded as excellent or good credit, while anything below 600 is regarded as poor or bad credit. The space between 600 to 700 is fair to average.
Banks and other lenders may view you as a higher risk and be more likely to reject your loan application if your credit report is less than ideal.
If you are approved independently despite having bad credit, the loan terms will be worse than those offered to borrowers with better credit. It might be time to consider getting a cosigner if you’re having trouble getting a good interest rate or getting approved at all.
>> Read More: Best Bad Credit Personal Loans
How Does Adding a Cosigner to a Personal Loan Work?
A cosigner is someone who signs the loan documents with you, essentially promising that they will make the payments and make sure the loan is repaid in full and on time if you are unable to.
From a lender’s perspective, this is a good thing. By approving your loan, they are reducing the risk they are taking on. Since the cosigner has good credit, there’s a good chance that they’ll step up and repay the loan if you can’t by making the required monthly payments.
You may be able to obtain a lower interest rate by having a cosigner for a personal loan or installment loan. A lender is typically more willing to offer those coveted lower rates if the risk associated with the loan is low, and a personal loan with a cosigner brings just that
>> Read more: How to Apply for a Personal Loan
What Are the Risks for a Cosigner?
Being a cosigner entails a lot of responsibility, so you should be sure of what you’re asking for before you ask someone to cosign your loan.
In essence, a cosigner pledges their own credit history as security for the loan. They gain nothing if you repay the loan in full by making your scheduled monthly payments on time.
However, your cosigner is responsible if you are unable to or do not make the required loan payments. Additionally, their credit may suffer greatly if their financial situation changes or if they are otherwise unable to make your payments for you.
Tips on Choosing a Cosigner for a Personal Loan
Cosigners are typically family members or close friends due to the risks involved, though anyone who is willing to cosign your loan may be accepted if the lender accepts them. But that doesn’t mean you should employ any willing party.
One who your lender will consider to be very low risk is a good cosigner. They will have a debt-to-income ratio that is stable and healthy, and it will be simple to prove with direct deposits or check stubs. Additionally, they must have a solid credit history and a long history of responsible credit use.
You should have a backup plan before asking someone to cosign your loan. Do you have a backup plan in case you are unable to make your loan payments, besides counting on your cosigner to do so?
Do you intend to use the loan proceeds for a worthwhile purpose, such as debt relief or credit card debt repayment, or will you use them for something unnecessary?
That not only demonstrates sound financial management, but it will also make your cosigner feel more at ease about agreeing.
There is still hope if the cosigner you had in mind declines to do so. Recognize that they are taking a big risk, and try not to get upset. You still have other options. There are numerous lenders who work with subprime borrowers, and even though you’ll pay higher interest rates, you’ll still receive the funds you require. Paying it back on time will help your own credit.
Even if you have bad credit, getting a personal loan or installment loan may be necessary at times. It can be simpler and result in better rates to have a cosigner.
Make sure you have a good repayment strategy in place before comparing loan offers to find the most affordable personal loan terms for your requirements.
You might want to think about applying for a joint loan if you are having trouble getting a personal loan even with a cosigner. With these, both borrowers share equal responsibility for the loan, which may encourage lenders to grant you a loan.
Recap of the companies listed above.
| Company | APR | Loan Amount |
| LightStream | – * with AutoPay | – |
| Upgrade | – | – |
*Your loan terms, including the APR, may vary depending on the nature, size, and duration of the loan as well as your credit history. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0. 50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.
**Payment example: Monthly payments for a $10,000 loan at 5. Three years at 95% APR would require 36 payments of $303 per month. 99.
***LightStream will offer a rate . If you were approved for the lower rate (with the same loan terms offered by LightStream) no later than 2 p.m., the rate offered on any competing lender’s unsecured loan would be reduced by ten percentage points. m. Eastern time two business days prior to loan funding. Any secured or collateralized loan offers from lenders are not eligible for the Rate Beat Program, and any customer with a similar credit profile must be able to access the competitive offer. Terms are subject to change at any time.
Contact LightStream customer service if you think you have been approved by another lender for a lower qualifying rate. Determine your Rate Beat eligibility with our assistance, and we’ll get the required paperwork.
FAQ
Can I get a personal loan with a cosigner if I have bad credit?
Applying for a personal loan with a co-signer can help you access funds you might not be eligible for on your own if you have poor credit or a limited credit history. A co-signer is typically a trustworthy friend or family member who consents to take on your debt in the event that you are unable to repay the loan.
What credit score does a cosigner need for a personal loan?
Lenders typically use credit reports (including payment history, credit mix, and credit scores) to determine a person’s likelihood of making future payments. Seek out cosigners or coborrowers with FICO scores of at least 700.
Can I get approved for a loan with a cosigner?
Your application may have a better chance of being accepted if your cosigner has a strong credit rating and a consistent source of income. Adding a creditworthy cosigner could also help lower interest rates. Missing payments, however, can lower your credit score and the credit score of your cosigner.
How hard is it to get a personal loan with a cosigner?
Each lender is unique, but the majority favor cosigners with credit scores of at least 670. Additionally, they must demonstrate their financial capacity to repay the loan in the event of default. A cosigner can be a dependable friend or relative who is willing to assume this responsibility.