Co Borrower

If borrowers can't get approved for a car loan on their own because of limited or poor credit history, poor credit scores, or even limited income, a co-borrower with better credit can often help them get approved.

A co-borrower is an additional borrower whose name appears on the loan documents and whose income and credit history are used to qualify for the loan. Under this arrangement, both the primary borrower and the co-borrower have an obligation to repay the loan. For a car loan, the name of the co-borrower also appears on the vehicle's title, which means they also have ownership rights to it. Co-borrowers are typically spouses or partners who can combine their income (co-mingle) to qualify for a car loan, and are willing to share the risk of default on the loan. In the case of a loan with a co-borrower, the lender also uses the combined income to determine debt-to-income and payment-to-income ratios.