Do I need a cosigner for an unsecured used car loan?

When applying for an unsecured used car loan, banks or Non-banking Financial Companies (NBFCs) will assess your creditworthiness to determine the risk of lending to you. They want to ensure you have the capacity to repay the loan. If the loan provider perceives you as high-risk, they may request or require a cosigner to approve the loan application.

Lenders consider your credit score, income stability, existing debts, and requested loan amount. Applicants with excellent credit scores demonstrating responsible repayment histories can often qualify for unsecured used auto loans without a cosigner. Those with average or poor scores frequently need a cosigner to get approved and secure better interest rates.

Additionally, if your income is inconsistent or unable to cover the required monthly payments sufficiently, the financial institution may ask that you add a cosigner with a more secure income to strengthen the application. The higher the loan amount or longer the repayment terms, the greater the incentive for the loan provider to mandate a cosign.