How much does a co-signer affect your interest rate on a car loan?
January 31st, 2010 | 
Author: uscjessie asked:
I have really bad credit – an early lesson learned. It is on the rebound ( I am paying off my collections one by one). I am out of school and have a ton of student loan debt. I wanted to drive my current car longer but it is giving out on me. I can’t get a decent car loan because of my credit. My current car payment is $250 a month and I have no problem paying it with my income. I ran into some major financial trouble 2 years ago and was 60 days late 3 times in a row. Since then, I am out of college, have a good job… etc. Anyway, a relative has offered to co-sign for me. How do the creditors determine what interest rate to charge? And, if I pay my secured credit card bills on time, how long would it be before I could refinance to get the co-signers name off?
bad credit car loan
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bad credit car loan
I’ll try to answer as many of your questions as I can:
1. If you have a secured card, you shouldn’t have a co-signer. I’d inquire about removing another person now. Ie, the reason for a co-signer is when they lend unsecured.
2. I can’t say exactly how much a co-singer will affect your debt. I suggest you try it both ways and go from there. It’s possible that you’ll still get a high rate but the co-signer enables them to lend to you.
3. Even if your rate is high, don’t worry too much. It seems to me that you’re on the right track and before long your credit will be strong again.
bad credit car loan
Auto finance is what I do for a living and it depends on the lender, most credit unions and manufacturers go by the best score/profile while most independent landers will look at both scores/profiles and come up with some kind of mix.
If your co-signer is really strong like 720 and up I would try your local bank or credit union first before you go to a dealer.
If not, find a large dealer that advertises Special Finance and talk to the Manager, they will be able to look at both you and your co-signers credit and know where to send the application to get the best rate.
As far as refinancing in your name only, you will need to make at least 12-18 payments as agreed and be able to budget for the payment.
Paying your secured credit cards will help your score but will not help as far as refinancing your vehicle.