Personal Loans With a Cosigner: Increase Your Chances of Approval

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Personal Loans with a Cosigner

Have you been applying for personal loan after personal loan only to be denied? Don’t give up hope. With the right cosigner, you might be able to qualify for loans from lenders that would deny you otherwise.

Personal loans with cosigners may even come with more favorable loan terms. Is this option right for you? We’ll explore how personal loans with a cosigner work in this guide below!

In the meantime, MoneyLion helps you find personal loan offers based on your background and info you provide. You can get matched with offers for up to $50,000 from top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

What are personal loans with a cosigner?

If you take out a loan yourself, you’re solely responsible for repaying it. A cosigner is someone who agrees to pay the debt if you miss one or more payments. Usually, people apply with a cosigner if they’re having trouble qualifying on their own or if they want a better chance of favorable loan terms.

What’s the difference between a cosigner and a co-borrower?

A cosigner makes payments only if the primary borrower fails to make them. On the other hand, a co-borrower is responsible for paying the debt from the start (along with the other borrower).

Can having a cosigner improve my chances of loan approval?

It might. Because the cosigner promises to pay if you don’t, lenders may be more likely to approve you with a cosigner. While it may help boost your approval odds in some cases, it’s still not a guarantee. 

When is a personal loan with a cosigner a good idea?

You don’t always need a cosigner, but here are a few instances where having one can help.

Limited or no credit history

If a bank or other lender can’t assess your creditworthiness, it will hesitate to approve you. If you have a cosigner with a strong credit history, you’re more likely to be approved.

Low credit score

If your credit score is low, you may only be offered personal loans with high interest rates — if you’re offered any loans at all. If your cosigner’s score is higher, you might qualify for a better interest rate.

Insufficient income

Lenders check your income to make sure you can afford to pay back your loan. If you’re denied a loan because your income is too low, a cosigner with a higher income might help you qualify.

Lower interest rates

Usually, the stronger your credit profile, the lower your interest rate will be. Even if your credit needs work, you might qualify for a lower rate based on your cosigner’s credit.

Building credit

Taking out loans and paying them back on time can improve your credit history, but you have to qualify for the loans first. Having a cosigner can make you more likely to qualify for credit-building loans.

Debt consolidation

If you have high-interest debt across multiple accounts, you’ll likely pay more over time. Consolidating your debt into a personal loan with a cosigner can help you save money and pay off your loan faster.

Who can be a cosigner for my personal loan?

Anyone who is willing to take on the financial responsibility can cosign. However, if you want to increase your chances of approval, your cosigner should have a higher credit score and stronger credit history than you do.

How to apply for a personal loan with a cosigner

First, you’ll need to research lenders and find which ones offer personal loans with cosigners. Once you choose a lender, you’ll need to apply. Both you and the cosigner will need to provide personal details and financial information. You also will both need to sign. 

Looking for an overview on the different personal loan products you could qualify for? MoneyLion offers a seamless way to help get offers for your funding needs. 

What are the risks and considerations for cosigners?

Cosigning a loan is a serious responsibility, as cosigners take on a lot of risks. Here are a few things potential cosigners should consider before making a decision:

  • The loan impacts their debt-to-income ratio and might lower their score.
  • If you can’t make payments on time, the cosigner is obligated to make them for you — they might end up being on the hook for the whole loan amount.
  • If you default on the loan, the cosigner’s credit score is at risk.

If you can’t repay the loan, you might strain the relationship between you and the cosigner. Always think carefully before asking someone to cosign.

Alternatives to cosigned personal loans

Do you lack a qualified cosigner? Don’t worry — personal loans with cosigners can be great, but there are other options out there.

Credit-builder loans

These loans are designed specifically for people whose credit scores have some room for improvement. Because your limited credit history or low credit score poses a risk to the lender, you don’t get the whole loan sum upfront. Instead, you’ll pay in installments before you receive some or all of the money.


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Secured personal loans

These loans require you to put down some type of collateral before you receive the money. That way, if you don’t make payments, the lender can take the collateral. One common example is a title loan — you get a loan based on your car’s value, but if you don’t pay it back, the lender can take possession of your car.

Take Control of Your Financial Future With a Personal Loan

Taking out a loan with a cosigner can be a great way to improve your financial standing. But think carefully before you take one out — if you can’t pay it back, that responsibility falls on the cosigner, putting their credit at risk and straining your relationship. 

A personal loan might be the next step on your financial journey. But you don’t want to settle for just any personal loan option. It can be helpful to get an overview of the different products you could qualify for. 

FAQ

Can I remove the cosigner later on?

Sometimes you can, but the process can be complex. Most lenders require you to refinance if you remove the cosigner. Without a cosigner, you pose a greater risk to the lender, so the lender might impose stricter loan terms or a higher interest rate.

Will the personal loan appear on both the cosigner’s and my credit reports?

Yes, it will — it shows up on the cosigner’s report as if the loan is theirs.

How long does it take to get approved for a personal loan with a cosigner?

That depends on the lender. Some lenders can approve or deny you on the same day (once they have both your information and the cosigner’s). Others take a few days or even longer.

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