What a co-signer does
A co-signer signs the loan with you. The lender looks at both of your credit and income, which can turn a no into a yes or lower your interest rate. If you miss payments, the lender can ask the co-signer to pay, and missed payments can show on both of your credit reports.
A co-signer is different from a co-borrower. A co-borrower usually shares ownership of the vehicle; a co-signer usually does not.
Who can co-sign
- Usually a family member, partner or close friend.
- Someone with good credit, often a score in the high 600s or above.
- Steady income that can cover their own debts plus your payment.
- A Canadian resident. Some lenders also ask that they live in the same province.
Applying with a co-signer? Start here
Takes about 2 minutes. No SIN needed to start and no hard credit check to see your options.
When a co-signer makes sense
- You have no credit history yet, such as a student or newcomer.
- You are rebuilding after bad credit, a consumer proposal or bankruptcy.
- Your income is new or hard to prove, such as a new job or self-employment.
- You were approved, but at a rate that makes the payment too high.
Questions to discuss before asking someone to co-sign
- What happens if I lose my job or can't pay?
- Will this loan affect your ability to borrow, for example for a mortgage?
- How will we keep each other updated on payments?
- Can we remove you from the loan later, once my credit improves?