What Are Some Alternatives To Cosigning A Loan?
If you are strapped for cash and need to make an urgent repair or have bills to pay, you might be considering a loan. Unfortunately, getting approved for a loan can be difficult, especially if you are a low-income family member or have a bad credit score. In cases like that, it is common to turn to a co-signer. Using a co-signer with good credit makes you more likely to be approved for your loan.
However, finding a willing co-signer isn’t easy, and you may wonder if there are any alternatives to cosigning a loan. In this guide from At Home Title Loans, we will explain the financial alternatives to cosigning for a loan and some loan co-signing risks that make the alternatives more appealing.
What Does Cosigning A Loan Mean?
When faced with an urgent financial emergency, you may feel the need to borrow money to avoid having to deal with late fees, service disruptions, credit reductions, or eviction. However, you may not be able to qualify for a loan if you do not have good credit or the collateral needed for a specific loan.
This is where cosigning a loan can come in. Cosigning a loan is when someone with good credit, such as your friend or family member, agrees to be financially responsible for your debt. The cosigner security is for the loan lender or bank if you cannot make the payments. You are still responsible for the repayment, but failing to make payments will leave the cosigner responsible for repaying the loan amount.
What Are the Loan Cosigning Risks?
If you need someone to cosign a loan for you to get approved, it’s because you don’t meet the requirements of the loan. The bank or lender doesn’t feel comfortable with your ability to repay the loan, so they need someone else to secure it. The reason you aren’t in a position to qualify may be that your finances are not strong enough for you to afford repayment.
When cosigning a loan, you still must repay the amount to the lender. If you cannot afford it, you risk affecting your and your cosigner’s credit scores. This can put a strain on your relationship with the cosigner, who now has to handle the debt you cannot afford, possibly ruining the relationship for good.
6 Financial Alternatives To Cosigning For A Loan
The significant loan cosigning risks may force you to look for financial solutions without cosigning. Thankfully, there are many non-cosigner loan options and secured loan alternatives that can help you in your time of need. Loan lenders accepting bad credit, government programs, and friends and family can all help you with alternatives to cosigning.
The following are six alternatives to cosigning:
1. Collateral Loan
With a low credit score, it can seem impossible to get a loan, especially if you can’t find a willing co-signer, and the task becomes more difficult.
If you have a bad credit score, a collateral loan might be one of the better alternatives to cosigning a loan. A collateral loan is precisely what it sounds like - you put up a valuable item to secure the loan, increasing the odds of approval since the lender is taking less risk.
Secured loan alternatives like title loans allow you to use your high-value collateral to essentially nullify the effect of your bad credit. You can borrow money with the loan lender having the security of your collateral, allowing you to access cash without needing good credit. This secured loan alternative will also prevent a negative credit impact, as these loans are not reported to credit bureaus.
2. Government Loan Options
Another one of your alternatives to cosigning a loan is looking into government loans. In the United States, there are a few loan programs offered by the government. There are options for business loans, agricultural loans, housing loans, education loans, Veterans loans, and more!
Loans are also available for people with low credit scores or low income. You can check online to see if you qualify for these government loan options.
3. Credit Repair Services
If you are struggling with your credit score and it is causing you to be turned away for loans, you might want to look into a credit repair service. If your need for a loan isn’t urgent, this might be one of the better non-cosigner loan options.
A credit repair service will help you set up payment plans and improve your credit score in organic ways. This option will not only help you in the short term but will improve your financial life and stability well into the future.
4. Peer-To-Peer Lending
One of the more popular financial solutions with cosigning is to borrow money directly from a friend or family member. Rather than having them cosign a loan for you, they may have the money to lend to you for your financial emergency.
This alternative to cosigning requires having someone close to you in your life with the excess money they can lend to you. It will also require you to have a plan to get them their money back, as failing to do so can ruin your relationship with them.
5. Borrowing From Your Savings
If you are currently putting money into your savings for an emergency fund or future purchase, you can borrow from your savings to help as an alternative to cosigning. While you might not want to use your savings for this emergency, it can help you pay for the urgent costs while avoiding the credit impact of missing important payments or cosigning for a loan.
Those who have an emergency fund have it for this exact situation: you’re facing a financial emergency but don’t have the money to afford it. You can easily borrow the money directly from your savings account and pay for the costs before experiencing the drawbacks of missing payments.
6. Bad Credit Personal Loans
While most banks and other lenders approve loans based on the borrower’s credit history, some vendors specialize in lending specifically to borrowers with bad credit scores. These bad credit personal loans are based on the borrower’s collateral or income.
In most cases, these are short-term loans, and the lender trusts the borrowers to make the payment or has the security of collateral to fall back on. Some examples of bad credit loans that serve as alternatives to cosigning are title loans, payday loans, or signature installment loans.
At Home Title Loans can connect you with lenders that offer these loans. Just fill out the online form on our homepage, and we will call you to connect you with a loan lender in your area. You can then learn about requirements, bring the required items to an in-person location, and get verified for a bad credit personal loan the same day you apply.
FAQs
How does borrowing secured loans affect your credit score?
Secured loan alternatives with At Home Title Loans do not affect your credit score. We do not report our loans to credit bureaus, meaning you can borrow money without lowering your credit score. This is an exemplary non-cosigning loan option because your credit will not be affected like when getting a cosigned loan.
Can you use someone else’s car title as collateral for a title loan?
Much like cosigning a loan, you may wonder if you can use another person's vehicle title to secure a title loan. This is not the case. The lien-free vehicle title you use must be in your name.
Can cosigning a loan for someone else affect my credit?
When you cosign a loan, you take on the responsibility of debt for another person. It will get reported to the credit bureaus as your debt and will stay there until it is paid off. Cosigning a loan can reduce your credit score.
Apply For A Secured Loan Alternative – Borrow Emergency Cash With Us Today!
Now that you understand alternatives to cosigning, you can attempt to borrow money to help pay for a financial emergency. Our title loans are a great way to get cash fast without needing good credit or a cosigner. We have a simple process that you can complete in less than 30 minutes, allowing you to receive emergency funds the same day or the next business day.
You can start the process right now by filling out our online inquiry form. We will connect you with a loan representative in your area who will guide you through the process, explain the requirements for the loan, and help you get same-day approval for bad credit loans.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.
