If you need a loan, you probably know what the application process involves, even if you’ve never applied for one before.
Among other things, the lender will assess your ability to pay them back. Based on this assessment, they may decide to lend you the money you need. If they do, the assessment will also decide how much and at what rates.
For this reason, if you’re under 30, never apply for a loan without using a cosigner.
3 Reasons You Should Always Have a Cosigner if You’re Under 30
As the name suggests, a cosigner is simply someone who signs for a loan with you. They don’t actually have any access to the money you receive, though. They’re just extra insurance for the lender. Essentially, they’ll be held just as responsible for paying back the loan as you are.
Not surprisingly, you’ll usually find your cosigner among friends and family members.
Fortunately, it’s typically not that hard to do. Here are three reasons you should consider it.
1. Building Solid Credit
Having good credit opens up a world of opportunities.
This is perhaps clearest to those who have bad credit or even those who simply have none at all.
Worse yet, it can be very hard to improve your credit when you’re in this position. After all, if someone won’t lend you money because of your credit, how do you go about improving it?
The answer is to use a cosigner.
As long as they have good credit, you’ll qualify for a personal loan. All you have to do then is pay it back and you’ll immediately enjoy a better credit score.
2. Qualifying for Private Student Loans
Private student loans are essential for anyone who doesn’t qualify for sufficient funding through federal programs.
They are also a great way to refinance your student loans and benefit from much better terms than the ones you originally received.
That said, private lenders tend to be a lot pickier about the recipients of their loans. They have to be. So if you want to take advantage of their services, count on having a cosigner who can help you qualify.
When you consider that this might be your only option for attending college or getting some help with massive student loan debt, it’s well worth it.
3. Taking Out a Mortgage
It should come as no surprise that buying a house is going to be expensive.
However, what you may not have known is that mortgages are actually getting more expensive.
That’s why even people who can afford the standard mortgage are getting cosigners. The savings this represents can make a huge difference as rates continue to worsen.
Don’t Sign for That Loan on Your Own
Almost everyone uses a cosigner at some point to take out a loan they really need. This includes people who would otherwise have no problem securing one. It’s simply far better to leverage a cosigner to lock in more favorable rates.
So no matter what you need a loan for, if you’re under 30, ask someone to cosign it. You now have three good reasons for doing so.