There are advantages to signing up for a student loan with a cosigner. But before you get into that first you need to be sure you have exhausted all other avenues such as scholarships, grants and federal student loans before you start to consider a private student loan. Do you absolutely need a cosigner? No, you don’t. If you have a good credit history and score, you can qualify easily for a student loan without a cosigner. Now remember private lending institutions would want to be sure that you are infact credit worthy. What is credit worthiness then? Simply put if you have a minimum of 2 years of continous employment with proof of income such as pay stubs from your employer to show for then you are deemed credit worthy. This along with a good credit score and you will find that private lending institutions and banks will be more than happy to fund your student loan.
On the other hand if you don’t, then maybe looking for a cosigner for your private loan might not be such a bad idea.
Here are the benefits of taking out a student loan with a cosigner.
- Firstly your chances of approval is greatly increased
- Next, you get the benefit of your cosigner’s credit score and history to negotiate and receive better terms on your loan.
- The rate of interest and period of your student loan is directly related to the risk associated with your loan. The better your cosigner’s credit the better are your rates.
- With a good co-signer you might be able to negotiate on the fees and incidental charges that are usually added when taking out a loan.
- Unlike other loans, the chances of your loan being disapproved because a parent or co-signer has enough funds is nil.
Now remember to choose your co-signer wisely. Most students have their parents act as co-signers. However, a co-signer need not be a relative. Anybody can act as a co-signer provided they meet the eligibility requirements. Any adult that meets credit and citizenship requirements can act as a co-signer for your student loan.
What Is The Co-Signers Responsibility?
An adult when he or she agrees to be a co-signer is basically assuming equal responsibility towards repayment of your student loan. The loan becomes part of the co-signers credit history as well.
What Does The Co-Signer Need To Apply?
The following information or documents are usually collected from a Co-Signer during the loan application process
- Current Address and Contact Information
- Social Security Number
- Employment related details such as Company name, address, phone number, gross salary, pay stubs etc
- Rent or Mortgage Payment Details
When Can I Remove A Co-Signer From My Loan?
When you have made 24 consecutive monthly payments towards your student loan on time and meets certain credit requirements you can then remove a co-signer from your loan.
Whether you need a co-signer or not is really dependent on the individual’s situation. If you have the following then you probably don’t.
- Established and positive credit score and history
- A decent debt to income ratio
- A minimum income of $12,000
If you don’t meet the above or if you are not getting good terms on your loan then you probably need a co-signer for your student loan
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