Personal loans can be a huge help. Whether you need to finance a pet’s surgery or consolidate debt, they can enable you to reach your goals. But what if you can’t get approved for one?
If you’re having trouble getting approved for a personal loan, getting a cosigner can increase your chances of getting a loan and receiving favorable loan terms. Here’s what you need to know about getting a personal loan with a cosigner and what lenders accept them.
Getting a cosigner for a personal loan
If you want to take out a personal loan, you typically need regular income and a good to excellent credit score. If you don’t have those things, it can be difficult to find a lender who will approve you. Or if you do qualify for a loan, you could get stuck with a high interest rate.
That’s where a cosigner can help. A cosigner is someone with good credit and stable income, usually a family member or close friend. The cosigner acts as a guarantor on the loan and takes on joint responsibility for its repayment. If you can’t make your monthly payments, the cosigner is responsible for them. Because having a cosigner lessens the risk to the lender, they’re more likely to issue you a loan and offer you better loan terms.
How much you can save with a cosigner
The savings of applying for a loan with a cosigner can be significant. For example, let’s say you applied for — and qualified on your own — a $10,000, five-year loan. Because of your credit, the lender gave you a 15% interest rate. Over the length of your repayment, you’d pay a total cost of $14,273.
But let’s say you had a cosigner, and, thanks to their help, you qualified for a 12% interest rate. Over the course of five years, you’d repay just $13,346. Having a cosigner on the loan would help you save close to $1,000.
What to consider before getting a cosigner on a personal loan
Having a cosigner has many perks, but there are two main benefits:
- You increase your chances of getting approved. Because a cosigner takes on some of the responsibility for the loan, having one lessens the lender’s risk. That benefit makes them more likely to approve your loan application.
- You could qualify for more favorable terms. Having a cosigner can help you qualify for a lower interest rate than you would receive if you applied for a loan on your own.
However, it’s important to do your research and figure out what’s best for you before adding a cosigner to your application. Here are a couple things to keep in mind when making your decision:
- You can damage relationships. If you fall behind on your monthly payments, you leave your cosigner in a difficult position. They have to make the loan payments instead, even if they can’t afford to do so, or risk their own credit being ruined (and no one wants bad credit). If that happens, you can bet that your personal relationship with that person can suffer.
- Your cosigner will always be responsible for the loan. It’s difficult to get a cosigner removed from a personal loan after the loan is disbursed. Your cosigner could be stuck for years being responsible for the debt, until it’s paid off. That’s why it’s so important that both you and your potential cosigner fully understand the risks and benefits of cosigning a loan before applying for a loan.
Lenders that offer personal loans with cosigners
Not all personal loan lenders allow you to add a cosigner to your physical or online application, but there are some that do. Here are six lenders that allow cosigners on their applications.
With FreedomPlus, the lowest rates they have available are usually only offered when you add a creditworthy cosigner to your application.
2. Laurel Road
If you don’t meet Laurel Road’s underwriting criteria, adding a cosigner to your application can increase your chances of getting approved. Laurel Road does a soft credit pull, which allows you to check your loan eligibility without impacting your credit score.
Generally, LendingClub offers loans to people with high credit scores, low debt-to-income ratios, and a credit report that shows a long credit history with a diverse mix of credit lines. If you don’t meet that criteria, LendingClub does allow you to submit a joint application, increasing your chances of getting approved for a loan.
LightStream is an online lender that offers many different types of personal loans, including both secured and unsecured loans. They do allow cosigners, which may help you qualify for a loan without having to put up collateral.
5. OneMain Financial
OneMain Financial caters to consumers with poor credit. They do allow joint applications, helping you qualify for a better rate than you would on your own.
6. Smaller banks and credit unions
While most major banks no longer offer personal loans, smaller banks and credit unions still do. And many of them allow you to add a cosigner to your application, helping you qualify for a lower rate. It’s a good idea to stop in at your local bank or credit union to see what rates they can offer you. If you already have a bank account with them, for example, you might be able to get a better rate.
If you want to request rates using Credible by filling out just one form (instead of one form for each) — and without affecting your credit score — check out our partner lenders. The personal loan companies in the table below compete for your business through Credible and all allow cosigners.
|Fixed: 5.99% - 29.99% APR||$10,000 up to $35,000||Get Rates|
• 2 - 5 years
• Debt consolidation, home improvement, wedding, travel, medical expenses, and other purposes
• Must be a resident in the U.S. with a valid Social Security number
• Required documentation includes verified income and bank account, a valid ID, and your signature
|Fixed: 6.95% - 35.89% APR||$1,000 up to $40,000||Get Rates|
• 3 - 5 years
• Debt consolidation, paying off credit cards, home improvement, pool loans, vacations, and other purposes
• Must be a U.S. Citizen or Resident Alien with a valid Social Security number and physical address, currently residing in the U.S.
• Must have valid government issued photo ID
|Fixed: 5.34% - 16.99% APR||$5,000 up to $100,000||Get Rates|
• 2 - 7 years
• Credit card refinancing, debt consolidation, home improvement, and other purposes
• Borrower must reside in the U.S.
Applying for a personal loan with a cosigner
When it comes to financing a major purchase, a personal loan can be a useful tool, offering lower interest rates and more favorable repayment terms than credit cards. However, it can be difficult to get approved for one on your own. Having a cosigner helps your chances of getting approved and qualifying for a low interest rate.
If you’re planning on taking out a personal loan, it’s a good idea to shop around to ensure you get the best deal. If you’re ready to apply for a personal loan, check out our list of the best personal loan lenders.