DO I NEED A CO-SIGNER?
But why would I need a co-signer?
If your credit is less than satisfactory, leasing companies will often ask you to find a guarantor or co-signer to sign the lease in addition to yourself. This is basically because they feel that they can’t 100% trust you to make your payments on time due to your waning credit history, so they need someone to back you up in case you don’t make the payments on time.
What’s the difference between credit history and credit score?
Basically a credit report is a list documenting all your late payments, still owed payments, credit limits, defaults, repossessions, and everything/anything that would make you look like an unreliable (or, conversely, reliable) person. Your credit score is a numerical score that is based on and summarizes your credit history. Banks, dealers, and finance companies aren’t going to sit there and sift through every single late payment you’ve ever made – instead, they’ll just look up your credit score and decide whether or not you’re reliable based on that.
So how exactly does a co-signer play a role in this?
A co-signer is someone with good credit whom takes on responsibility for making the lease payments in the event that you cannot. Needless to say, very few people in your life would probably be willing to take on this responsibility (maybe your mom if you’re lucky), so good credit is definitely important. If not, start to get on your mom’s good side ASAP.
Both your name and the co-signer’s name goes on the leasing contract, even though the co-signer is not considered a co-leaser.
How much weight does a co-signer have in deciding whether or not I can lease a car?
The co-signer is considered to be the primary score leasing companies consider, which means your credit approval is heavily and primarily based on your co-signer’s credit and qualifications. This is extremely good news if you have less than satisfactory credit and a good relationship with your mom.
What does this mean for the co-signer?
Co-signing on a lease does affect your credit history, and subsequently, your credit score. If the person you co-signed for makes his payments on time, both him and you receive a positive score. If not, both you and him receive a negative score. So either make sure that the person you are co-signing for is reliable and will make the payments on his own, or just make the payments yourself. It’s not worth getting a bad credit score due to a few late payments on a lease you co-signed for.
What if my mom hates me and I can’t find a co-signer for my lease?
That’s rough. You should probably try to talk to her or something?
If that doesn’t work, you can get an auto-loan from a sub-prime lender (you should ask your dealer about this). The catch is that interest rates are usually substantially higher for sub-prime loans, so it’s important to get a bunch of quotes from different lenders to compare.
Keep in mind, you don’t have to go to a lender that the dealer you’re talking to works with – you can get your own independent quotes to ensure you’re getting taken care of to the best of your ability.
Getting a co-signer with good credit is a really good way to rebuild your credit score if you have a bad score. It’s also the best way to get into a car lease. And calling your mom once in a while wouldn’t kill you.
Check out our exclusive lease deals here.