Ramifications for a cosigner on an auto loan?

My ex-wife really damaged my credit a couple of years ago. I need a vehicle now as I'm switching employer's and have to give up my company car. I make good money, so the payment is not an issue, it's just really unfortunate that my credit still suffers as a result of my divorce two years ago. My question is that if my girlfriend co-signs for me to get a favorable rate, will it affect her ability to purchase a vehicle, say a year or so down the line?

Ramifications for a cosigner on an auto loan?

only if you default on the loan

Ramifications for a cosigner on an auto loan?

Yes it can affect her, depending on what the credit looks like. Some people can finance 5 cars with only 100k income, and some can only finance one with the same income, it's how everything else is paid.

I'm a little perplexed though, you had two years since your wife damaged your credit. Under normal circumstances, while making good income, it should be fairly easy to repair after so long. Did you miss some payments since then, just finish catching up, or are we talking bankruptcies or judgments?

Ramifications for a cosigner on an auto loan?

Well obviously if you do not make the payments perfectly it will affect her credit negatively as well as yours. But there is another consideration. Her (or your) credit score is not the only evaluation criteria used in approving her future vehicle loan.

There is something called Debt to Income ratio. This is a comparison of what her income is (adjusted to net income) compared to what her payments are. When she co-signs a loan for you it is looked at like she has to make the payment, which would be the case if you don't make it. In other words co-signing your loan will count against her debt to income ratio. It depends on how much she makes and what her payments actually are, but yes, even if you make the payments perfectly, her co-signing for you can possibly prevent her from purchasing the vehicle she wants somewhere down the road.

Ramifications for a cosigner on an auto loan?

You should only have her sign if you are serious and plan to be with her long-term. If all you are looking for is a better rate you might consider just biting the bullet and pay the higher rate.

When your girlfriend applies for a loan they will consider her payment your car when doing her debt-to-income. If she has really good credit and low debt it probably will not make a difference.

There might be a situation where you will have to co-sign for her car loan to make the debt-to-income work (see first paragraph).

Ramifications for a cosigner on an auto loan?

As long as you keep up payments on the car... and this loan does not negitively impact her debt to income ratio... it will NOT affect her ability to purchase a vehicle in a year or two.

If your credit was injured a few years ago and you have since paid off all of your bad debt, you may want to consider going to www.roadloans.com

It would help your credit more to try to get financed on your own.