The Differences Between Cosigners and Co-buyers in Car Loans

February 10th, 2020 443 Auto Sales
Cosigner Vs Co-buyer

Are you thinking of taking out a car loan? You might want to find a co-buyer (also known as a co-borrower) or a cosigner. Their financial help can strengthen your loan application.

A Co-Buyer For a Vehicle Purchase

A co-buyer is literally buying the car with you. That means they get the benefits and responsibilities of ownership– because it’s just as much their car as it is yours! Not only do they have the right to use the vehicle, but they also are responsible, along with you, for paying off the loan. If you have a co-buyer, both of your names will be on the sales contract, as well as the finance agreement contract and the car title/registration. Co-buyer situations typically involve a parent and a teen… the teen wants a car but money is tight, so he or she enlists dad or mom to help “co-buy” their car. Co-buyers can also include couples (married or dating) who want to share ownership of a vehicle. 

A Cosigner for a Vehicle Purchase

What about cosigners? These are people who lend their “good credit” to the primary signer of the car loan. So, for instance, say someone has questionable income but really wants and needs a car… so they ask their well-off friend or family member to “cosign” for their purchase. That person is essentially vouching for them, saying, “Listen, if the borrower can’t make his or her payments, I’m here with money and I’ll take care of it for them when needed.” Basically, the cosigner guarantees the debt and is legally responsible for making car payments as well as late fees and/or collection charges should the borrower default on the loan.

So what’s the main difference between a co-buyer and a cosigner? A co-buyer owns the car. A cosigner does not own the car. Cosigners take a risk but don’t get benefits!

When applying for a car loan having a co-buyer works in your favor because you’re getting the benefit of their income and good credit. Cosigners are helpful when you need to prove to a loan company that they should give you the loan– you’ve got someone vouching for you. Either way, when you have help with financing, your credit will likely improve and you get to enjoy owning a vehicle.

If you’re looking for dependable used vehicles in the Lehighton, PA area, check out the inventory at 443 Auto Sales.

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