Best personal loans with a cosigner in May 2024

Consumer debt is on the rise with the total reaching a record $17.5 trillion in the fourth quarter of 2023, according to the New York Federal Reserve. But lending standards are tightening. If you’re struggling to qualify for a loan due to a history of late and missed payments, or no credit history, the support of a cosigner might increase your chances of approval.

Whether you're aiming to consolidate debt, fund a major purchase, or cover unexpected expenses, having a trusted cosigner by your side can unlock access to competitive interest rates and higher loan amounts.

Best personal loans with a cosigner

While adding a cosigner to your personal loan application may improve your chances of getting approved, not all lenders provide a cosigner option. The following lenders do.

BHG Money: Best for large personal loans

OneMain Financial: Best bad credit personal loans

Other lenders that allow cosigners

Other lenders that may accept cosigners include: 

1. PenFed
2. Navy Federal
3. Laurel Road
4. Achieve 

Methodology

We evaluated the best personal loan lenders with a cosigner based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date. Read our full lender rating methodology for more information.

What is a cosigner?

A cosigner is someone who takes equal responsibility for a loan and agrees to pay back your loan if you miss a payment or stop making payments. You might ask a family member or friend to act as a cosigner on a personal loan, car loan, or mortgage to increase your chances of getting approved.

If you have a poor credit score (a FICO score below 580) or no credit and you’re struggling to qualify for a loan, adding a cosigner with good credit, a sufficient income, and a low debt-to-income ratio (DTI) can reduce the risk to the lender.

Before adding someone as a cosigner, make sure you both understand the risks involved. If you make a late payment, this can negatively impact your credit as well as your cosigner’s and make it more difficult for you both to borrow money in the future.

Related: What Is a Personal Loan?

Cosigner vs. co-borrower

While a cosigner and co-borrower can each help to improve your loan application, there is an important difference between the two.

A cosigner is liable for your debt, like a co-borrower, but they have no right to the loan proceeds. A co-borrower or joint applicant, on the other hand, has equal rights to the loan funds.

For instance, if you want a personal loan to consolidate debt, you might ask a parent to act as a cosigner to strengthen your loan application. Along with you, your parent is responsible for the loan, even though they don't benefit from it. In other words, if you miss a payment or default on the loan, your parent would be on the hook to pay your debt. However, they can’t access or use the money.

If you and your partner decide to co-borrow a personal loan to improve your home, you would be equally responsible for making payments, and both have equal rights to access the money.

When is a cosigner a good idea?

You might consider adding a cosigner to your personal loan application if:

• You have no credit or a limited credit history
• You have a poor credit score (a FICO score below 580)
• You have a fair credit score (a FICO score between 580 and 669)
• You have limited or unstable income
• You have a high DTI

An ideal cosigner has a good or excellent credit score, a strong credit history, stable income, and a low DTI.

How to compare personal loans

To determine the best personal loan with a cosigner, compare multiple lenders before making a decision. Consider the following factors:

• Cosigner option: Not all personal loans allow you to add a cosigner. Confirm that the lender provides the option of adding a cosigner to your application.
• Qualification criteria: Check each lender’s qualifying criteria to make sure your cosigner meets or exceeds it.
• Notice to cosigner: When you include a cosigner on your personal loan application, the lender will typically provide a “notice to cosigner” that explains what will happen if you fail to make your payments.
• APR: The annual percentage rate (APR), which accounts for the loan’s interest rate and any upfront fees, is one of the most important factors, as it determines how much it will cost to borrow the money. Having a cosigner with a strong credit score and income can often help you secure a lower APR.
• Fees: Compare origination fees and other fees, like late fees, between lenders. Adding a cosigner to strengthen your application may help lower or remove an origination fee, and some lenders don’t charge them at all.
• Loan amount: The amount you can borrow depends in part on the lender’s maximum loan amount, but more so on what you can qualify for. A cosigner may help you secure a higher loan amount, but make sure you only borrow what you need to prevent taking on unnecessary debt.
• Repayment terms: Compare how long you have to repay your loan. A longer term will result in lower monthly payments, but you’ll also pay more in interest over time. It’s often best practice to have an affordable monthly payment over a lower interest cost.

Check Out: Best Personal Loan Rates

How to apply for a personal loan with a cosigner

To apply for a personal loan with a cosigner, take the following steps:

1. Find a cosigner: Consider who you could ask to cosign your loan. Ideally, you want someone with an excellent credit score and strong income to improve your overall application.
2. Know your credit score: Before applying for any loan or credit product, you should review your credit score. This way you’ll know if you meet the qualification criteria, and you can confirm there are no issues or mistakes on your report. You also want to know the credit score of your cosigner to ensure it’s high enough to meet the lender’s requirements.
3. Get your documents in order: Lenders will require certain information and documents, such as your driver’s license and Social Security number, to confirm your identity, as well as financial documents, such as pay stubs or bank statements, to confirm your income. With a cosigner, the lender will request documents from both of you.
4. Prequalify: Going through the prequalification process gives you a sense of the rates and loan terms you may be eligible for from each lender. To prequalify, the lender will typically do a soft credit pull that will not impact your credit score.
5. Compare lenders: Once you prequalify with a few lenders, compare them to see which lender best suits your needs and budget. Note that prequalification rates are not offers of credit and your final rate and terms could differ.
6. Apply: After you’ve chosen your top lender, you can apply for the personal loan with your cosigner. The lender will perform a hard credit check for you and your cosigner. This can cause a temporary drop in your credit score, and your cosigner's credit score as well.

Risks of getting a personal loan with a cosigner

Before asking someone to cosign a loan, make sure you both understand the risks. In addition to hurting your credit, you could ruin your relationship with your cosigner if you miss a payment or default on your loan.

Your cosigner takes on several risks, including:

• Damaging their credit score: If you miss a loan payment, this can negatively impact your cosigner's credit score.
• Increasing their DTI: Cosigning a large personal loan can drive up your cosigner’s DTI and could make it difficult for them to borrow money.
• Paying off the entire loan: If you default on your loan, the lender could come after your cosigner to repay the entire thing.
• Legal action: Depending on laws in your state, if you default on your loan, you and your cosigner could face legal action.

Personal loans with a cosigner FAQ

Is it easier to get approved for a personal loan with a cosigner?

Applying for a personal loan with a cosigner can improve your chances of getting approved and at a better rate. Adding a cosigner with a strong credit score and an income higher than yours can reduce the overall risk to the lender.

What credit score does a cosigner need to have?

The credit score needed by a cosigner can vary between lenders. However, having a cosigner with a good or excellent credit score — a FICO score of at least 670, but ideally 740 or above — and a steady source of income can open up more lending options.

What happens if I can’t repay my loan with a cosigner?

If you’re unable to repay your loan, your lender will look to your cosigner to pay your bill. When your cosigner is added to your loan application, they take on responsibility for your payments. As a result, if you can’t pay, your cosigner will be on the hook for the debt. 

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