1. Improved Credit Score: Adding a cosigner with good credit can help improve the overall credit profile associated with the loan. Lenders consider the credit scores of both the primary borrower and the cosigner when determining the loan terms. A higher combined credit score can lead to more favorable loan terms.
2. Lower Risk for the Lender: A cosigner with good credit acts as an additional guarantor for the loan, reducing the lender's risk. This can make the lender more willing to offer a lower APR and better loan terms, as they are more confident that the loan will be repaid.
3. Increased Borrowing Power: Adding a cosigner with good credit can also increase your borrowing power. Lenders may be willing to approve a larger loan amount or offer more favorable loan terms based on the combined credit strength of both borrowers.
However, it's important to note that the specific impact on your APR and monthly payment may vary based on the lender's policies, underwriting criteria, and the loan terms. Some lenders may weigh the cosigner's credit more heavily than others, and some may require the cosigner to be present at the time of loan approval. It's always a good idea to discuss the potential benefits and terms with the lender or financial institution handling your car loan.
