Can You Get a Personal Loan With a Co-Signer Easily?

You can get a personal loan with a co-signer, but it isn’t a guarantee. A lender will look at a co-signer’s credit, debt-to-income (DTI) ratio and income to determine if you’ll get approved. In situations where a co-signer has a good credit score and a solid credit profile, there are high chances you will get approved for your loan.

Find out how personal loans work with a co-signer and whether it may be a good fit for you.

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Quick Take

• A co-signer is another individual who applies for a loan with you, so you have a better chance of approval.

• You can get a personal loan with a co-signer, but it’s not guaranteed.

• A co-signer is responsible for the debt but doesn’t have ownership rights.

• If you default on the loan, it will impact the co-signer’s credit.

• A co-signer will not help you with approval if they have bad credit or too much debt, or if you have a recent delinquency, like bankruptcy or foreclosure.

What Is a Co-Signer?

A co-signer is an individual — family member or friend — who puts their name on a loan application to help you get approved. The co-signer doesn’t have any ownership rights but is responsible for the debt.

When a Co-Signer Helps You Get Approved

• Your credit history is thin: If your co-signer has a positive and long credit history, it can help you get approved for the loan.

• You have a low credit score: A co-signer with a high credit score can help you get approved.

• Your income is too low: If your income is lower, your co-signer’s income can boost your chances of approval.

When a Co-Signer Doesn’t Help

• You have past delinquencies: If you have a recent foreclosure or bankruptcy, a co-signer may not be able to help.

• Your co-signer has too many debts: If the co-signer is already leveraged with too much debt, the lender will not look at this too favorably.

• Your co-signer has bad credit: A co-signer with bad credit will not help with approval.

Co-Signer vs. Co-Borrower vs. Guarantor

A co-signer, co-borrower and a guarantor can all be part of the loan, but their roles differ in what they own. Here are the differences:

What Does a Co-Signer Need To Qualify?

Adding a co-signer is intended to help the borrower get approved for the loan. Here’s what a co-signer will need to qualify for the loan:

• A good credit score: Scores of 670 or higher will have greater chances of approval.

• Consistent, stable income: The lender will look for a stable income history to make sure the co-signer can pay if the primary borrower is unable to pay.

• A low DTI ratio: You can calculate DTI by taking your gross monthly income and dividing it by your monthly debt payments. Once you have that number, multiply it by 100. Here are the thresholds:

  • 36% or higher: Strong

  • 37% to 43%: Borderline

  • 43%: Approval becomes difficult

How Applying With a Co-Signer Works

It’s pretty straightforward to apply for a loan with a co-signer:

1. Find a lender that allows for co-signers: Do a search for lenders that allow for co-signers.

2. Try to prequalify together with your co-signer: The company will do a soft credit check on you and the co-signer.

3. Submit a joint application: You and the co-signer will provide personal and financial details based on the application questions.

4. The lender will look at credit profiles: The lender will assess the credit profiles of both you and the co-signer.

5. The lender will either approve or decline your application: If approved, review the annual percentage rate (APR), monthly payment, fees and repayment schedule for the loan.

6. Sign the agreement: If the terms work for both you and the co-signer, sign the agreement.

7. Receive the funds and begin repayment: The primary borrower receives the funds, but both the borrower and co-signer are responsible for making payments.

What Documents You’ll Need

When applying with a co-signer, lenders will review financial details from both parties:

If You’re the Borrower

• Driver’s license or passport

• Pay stubs, W-2’s or tax returns

• Employment information

• Bank account details

• Social Security number

• List of current debts and expenses

If You’re the Co-Signer

• Driver’s license or passport

• Proof of income

• Employment details

• Social Security number

• Credit history and financial information

Risks of Using a Co-Signer

There are certain risks of using a co-signer for the borrower:

• Having a co-signer may push you to take on more debt.

• You may lose your independence because the co-signer may tell you what to do with the funds.

• If you fail to pay for the loan, it may cause friction between you and the co-signer.

Lenders That Allow Co-Signers

These lenders may allow you to apply with a co-signer:

Quick Example: Cost and Approval Impact

Here’s a simple example to show how adding a co-signer can affect both approval and cost:

Without a Co-Signer

A borrower with a 580 credit score applies for a $10,000 loan over three years. With fair credit, approval may be difficult, and if approved, the borrower could receive a high interest rate of around 32%.

• Monthly payment: $435

• Total interest paid: $5,660

With a Co-Signer

If the borrower adds a co-signer with a 760 credit score, they may qualify for a much lower rate — around 10%.

• Monthly payment: $322

• Total interest paid: $1,592

Total impact: Adding a co-signer could save about $4,068 in interest and reduce the monthly payment by $113.

4 Alternatives to Using a Co-Signer

If you don't meet the personal loan requirements and you aren't able to find a co-signer, you have some other options.

1. Consider Applying With a Co-Borrower

Unlike a co-signer, a loan co-borrower shares access to the loan funds, so they're not just signing on to take responsibility for repayment in your stead.

A co-borrower should be someone you trust, and make an agreement in writing for how you'll split up the loan funds and payments.

2. Improve Your Credit Score Before You Apply

If you're new to credit and wondering how your credit score is calculated, several factors weigh in:

• Payment history: 35%

• Credit utilization: 30%

• Credit history length: 15%

• Credit mix: 10%

• New credit inquiries: 10%

Some of these take time to build up, but your best bet for increasing your credit score is to make on-time payments and pay off your debt.

3. Try a Secured Personal Loan

You could also try applying for a secured personal loan, which uses collateral like cash in a savings account or even the home you own.

Since you're putting up collateral, the lender may be more willing to extend you the funds even if your credit is poor.

4. Borrow a Smaller Amount

Consider borrowing a smaller amount than you originally intended if you're struggling to get approved for a personal loan. Smaller loans are generally easier to get approved for.

Can You Remove a Co-Signer Later?

You can remove a co-signer in the future. Here are the ways you can do so:

1. You can ask the lender for a release after you’ve shown that you can make at least 12 to 36 months' worth of consistent payments.

2. You can refinance the loan.

In both instances, you must provide proof that you make the payments on your own. The lender will determine if you are qualified to do so based on your own credit and debt-to-income ratio.

Pros and Cons of a Co-Signer

A co-signer can help you qualify for a loan, but there are both benefits and risks to consider:

Co-Signer FAQs

Can you get denied even with a co-signer?

A co-signer isn’t a guarantee that you’ll get a loan. The lender will look at a co-signer’s credit, DTI ratio and income, and will make their own judgment call.

Is a co-borrower the same as a co-signer?

No, a co-borrower and a co-signer aren’t the same. A co-borrower has the same ownership rights as the primary borrower. However, a co-signer has no ownership rights but is responsible for the debt.

Can you remove a co-signer later?

Yes, you can remove a co-signer by refinancing your loan or securing a release from the lender. You will also have to prove that you can pay the loan on your own.

How long does approval take with a co-signer?

It usually takes an additional one or two weeks to get approval.

Sarah Silbert contributed to the reporting for this article.

Photo Credit: Moyo Studio / Getty Images