You can use a personal loan for many things, including debt consolidation, home renovations, or financing big-ticket items. But if you have limited income, a low credit score, or a short credit history, it might be difficult to qualify for a personal loan on your own. If that’s the case, one solution is to look into cosigner personal loans.
A cosigner is someone — usually a creditworthy spouse, family member, or friend — who agrees to take responsibility for the loan if you fail to make payments. Having a cosigner on a personal loan could boost your approval odds, especially if the cosigner has good credit and steady income.
A cosigner could also help you get better terms and interest rates since lenders consider their financial and credit information alongside yours when underwriting the loan. Not all personal loan lenders allow cosigners, so be sure to check the lender’s requirements before applying for one.
- How does getting a loan with a cosigner work?
- Best personal loans with a cosigner
- Tips for getting a loan with a cosigner
- What are the risks of using a cosigner
- Frequently asked questions
How does getting a personal loan with a cosigner work?
When you apply for a personal loan with a cosigner, they’ll either complete their own formal loan application or add their information to yours. This application can be filled either online or in person. Either way, the lender will then review each of your submitted information to determine whether to approve or deny the application based on the risk involved — and their requirements.
You’ll need to meet certain eligibility criteria to qualify for a loan, which can vary across lenders. These typically include:
- A minimum credit score of 660
- Regular income and/or verifiable employment through documents like W-2s, pay stubs, or bank statements
- No greater than a 43% debt-to-income (DTI) ratio — total monthly debt payments divided by your gross (before taxes) income
- Being at least 18 years old
- United States citizenship or permanent residency
Some lenders have more lenient lending requirements. For example, you may be able to get a personal loan with fair or bad credit. However, these loans often come with higher interest rates and less favorable terms. A lower credit score or higher DTI ratio could also make it harder to get a larger loan. We’ll explain more about DTI ratios later in this article.
The cosigner acts as a guarantor for the loan, meaning they’ll be responsible for making payments if you can’t. Because of this, personal loans with a cosigner can reduce the overall risk to a lender, making them more likely to approve the loan — with potentially better terms and lower interest payments.
If you make the monthly payments on time and repay the loan in full, you could also improve your credit score over time.
Best personal loans with a cosigner
If you’re looking for a cosigner for a personal loan, it’s a good idea to compare different lenders. The following six lenders are Credible partners that accept cosigners on your loan application.
Achieve (formerly FreedomPlus)
Achieve has loaned more than $7.5 billion to over 400,000 borrowers. With a minimum credit score of 620 for personal loans, Achieve is an accessible option if you have fair credit. The lender may be a good choice if you prefer working with a loan consultant who can customize your loan, though Achieve also allows you to complete the loan application process online.
Achieve also offers unique rate discounts — you may qualify for a lower rate if you apply with a co-borrower, show proof of retirement funds, or allow Achieve to pay your creditors directly when you consolidate debt. However, the lender has a high minimum loan amount, so it’s not ideal if you only need a small loan. In addition, Achieve doesn’t offer personal loans in every state, and it charges an origination fee.
- Interest rates: 7.99% to 35.99%; fixed
- Loan amounts: $5,000 to $50,000
- Loan terms: 2 to 5 years
- Minimum credit score: 620
- Loan types: Debt consolidation, credit card refinance, home improvement, vacation, medical, wedding, moving, large purchase; unsecured
- Funding time: As soon as 1 to 3 days after approval
- Eligibility: Must have an annual minimum income of $80,000; must not live in CO, CT, HI, KS, ND, NV, VT, WI, WV, or WY
- Fees: Origination fee of 1.99% to 5.99%; no prepayment penalties
- Cosigner acceptance: No; accepts co-borrowers
- BBB rating: A+
Pros:
- Wide range of loan amounts
- Fast funding
- Accepts co-borrowers
- No prepayment penalties
- Offers rate discounts
Cons:
- High minimum loan amount
- Charges an origination fee
- Not available in all states
LendingClub
LendingClub could be a worthy option if you want to apply for a personal loan with a co-borrower. Adding a co-borrower to your application can improve your chances of approval, especially if you don’t have the best credit.
LendingClub also offers a grace period for late payments — you have 15 days to make your payment before being charged a late fee. On the downside, funding may take a bit longer with LendingClub, as it can take up to a week to receive your loan funds after you’ve been approved.
- Interest rates: 9.57% to 36.00%; fixed
- Loan amounts: $1,000 to $40,000
- Loan terms: 3 to 5 years
- Minimum credit score: No minimum credit score
- Loan types: Debt consolidation, home repairs, medical bills, and more
- Funding time: 2 to 7 business days after approval
- Eligibility: Be a U.S. citizen or resident; be at least 18 years old; have a verifiable bank account
- Fees: Origination fee of 3% to 6%; no prepayment penalties; late fees may apply
- Cosigner acceptance: No; accepts co-borrowers
- BBB rating: A
Pros:
- No minimum credit score requirement
- May be approved within a few hours
- Allows joint loans
- Low minimum loan amount
- Late payment grace period
Cons:
- Charges an origination fee
- Doesn’t accept cosigners
- Few repayment term options
- Relatively longer time to funding
LightStream
LightStream is an online platform that offers loans to individuals with good-to-excellent credit profiles. Unlike some lenders, LightStream offers benefits like an autopay discount. When you sign up for automatic payments prior to loan funding, you can qualify for a 0.50 percentage point discount on your interest rates.
In addition, LightStream has a convenient mobile app that makes it easy to check your loan balance and make payments. However, the lender has a high minimum loan amount, so if you only need a small loan, you’ll need to look elsewhere.
- Interest rates: 7.49% to 24.49% (with autopay); fixed
- Loan amounts: $5,000 to $100,000
- Loan terms: 2 to 12 years
- Minimum credit score: Does not disclose
- Loan types: Home improvement, debt consolidation, medical expenses, weddings, auto loans, and more; unsecured
- Funding time: As soon as the same day
- Eligibility: Must have good credit; must have sufficient income to support your existing debts and loan amount; must have a valid Visa or Mastercard
- Fees: None
- Cosigner acceptance: No; co-borrowers accepted
- BBB rating: A+
Pros:
- Fast funding
- High maximum loan amount
- Long repayment terms
- No fees
Cons:
- Only approves borrowers with good-to-excellent credit
- High minimum loan amount
- Doesn’t disclose many eligibility requirements
- Must have a Visa or Mastercard
Happy Money (formerly Payoff)
Happy Money offers a personal loan specifically designed to help you repay credit card debt. You can apply for what it calls the The Payoff Loan — once you’re approved, you can either have the money deposited into your bank account or applied directly to your credit cards.
The Payoff Loan comes in amounts ranging from $5,000 to $40,000, with terms spanning two to five years. You may qualify with fair credit, depending on your debt-to-income ratio and your credit history.
- Interest rates: 10.50% to 29.99%; fixed
- Loan amounts: $5,000 to $40,000; minimum $5,100 in NM and $6,100 in MD
- Loan terms: 2 to 5 years
- Minimum credit score: 640
- Loan types: Credit card debt consolidation
- Funding time: 3 to 6 business days after signing loan documents
- Eligibility: Be at least 18 years old; have a valid Social Security number; have a valid checking account; have zero delinquencies; have at least 3 years of established credit; not available in MA or NV
- Fees: Origination fee of 0% to 5%; no prepayment or late fees
- Cosigner acceptance: No
- BBB rating: A+
Pros:
- Option to pay off your credit card issuers directly
- No late fees or prepayment penalty
- Willing to work with borrowers facing financial hardship
Cons:
- Charges an origination fee
- Long approval and funding times
- Not available in MA, NV
- Requires at least fair credit
- No rate discounts
PenFed
Because PenFed is a nonprofit credit union, it’s able to offer lower interest rates than some lenders.
You don’t need to be a member to apply for a loan at PenFed. However, once you decide to go ahead with a loan, you’ll need to become a member. This is a simple process that only takes a few minutes.
PenFed can be a great option if you need a small loan, since its minimum loan amount is just $600. However, the lender doesn’t disclose many of its eligibility requirements online, which can make it difficult to determine if you’ll qualify for a loan before applying.
- Interest rates: 7.74% to 17.99%; fixed
- Loan amounts: $600 minimum to $50,000
- Loan terms: 1 to 5 years
- Minimum credit score: Does not disclose
- Loan types: Debt consolidation, home improvement, transportation, medical and dental expenses, weddings, and more; unsecured
- Funding time: 1 to 7 business days
- Eligibility: Must provide proof of income; must have a Social Security card, utility bill, passport, or copy of a valid government-issued ID for proof of identity
- Fees: Late fee of $29; no origination fees or prepayment penalties
- Cosigner acceptance: No; co-borrowers accepted
- BBB rating: A+
Pros:
- Competitive interest rates
- Small minimum loan amount
- No origination fees or prepayment penalties
- Accepts co-borrowers
Cons:
- Must be a member to receive loan funds
- Doesn’t disclose many eligibility requirements
- Charges late fees
SoFi
SoFi offers personal loans up to $100,000, making it a worthwhile option for borrowers who need large loan amounts for home improvement projects, wedding costs, or other needs. SoFi can also fund your loan the same day you’re approved.
SoFi’s website states that you can check your rate online in just 60 seconds, with no impact on your credit score. And you don’t have to worry about how you’ll repay your loan if you’re laid off; if you’re approved for SoFi’s Unemployment Protection, the lender will modify your payments for up to 12 months and will help you find a new job, too.
- Interest rates: 8.99% to 25.81%; fixed
- Loan amounts: $5,000 to $100,000
- Loan terms: 2 to 7 years
- Minimum credit score: Does not disclose
- Loan types: Credit card consolidation, home improvement, wedding, relocation, vacation, medical expenses; unsecured
- Funding time: As soon as the same day you sign your loan agreement
- Eligibility: Must be at least 18 years old (or age of majority in your state); must be a U.S. citizen, eligible permanent resident, or non-permanent resident alien; must reside in a state where SoFi is authorized to lend; must be employed, have sufficient income from other sources, or have an offer of employment to start within the next 90 days
- Fees: None
- Cosigner acceptance: No; co-borrowers accepted
- BBB rating: A+ (not BBB-accredited)
Pros:
- Large loan amounts
- Fast funding
- No fees
Cons:
- High minimum loan amount
- Doesn’t disclose minimum credit score
- Doesn’t accept cosigners
Methodology
To find the “best companies,” Credible looked at loan and lender data points from 10 categories to give you a well-rounded perspective on each of our partner lenders. Here’s what we considered:
6 tips for getting a personal loan with a cosigner
Here’s how to find the right cosigner for your personal loan:
- Choose someone you trust
A cosigner should be someone you know and trust. After all, they’re sharing responsibility for the loan with you. It helps to choose someone who can also help keep you accountable for making payments on time.
- Make sure the cosigner’s credit and/or income are significantly better
A cosigner backs the loan and reduces risks for the lender. Because of this, it’s generally a good idea to choose a cosigner who exceeds the lending requirements. The better their income and credit, the better your approval odds, terms, and rates.
- Consider your debt-to-income ratio
Your DTI ratio is the percentage of your gross monthly income you put towards debts like housing expenses, credit cards, and other loans. Say, for example, you spend $1,500 a month on debts and mortgage or rent. If you make $3,500 a month (gross), your DTI ratio is 43%.
Many personal loan lenders prefer a maximum DTI ratio of 36% to 43%. The lower your DTI ratio, the better your approval odds.
- Get prequalified
Prequalification gives you an idea of how much you could qualify for — and at what rates — without affecting your credit score. To prequalify, you’ll typically need to provide your contact information, personal details, income, and employment information. The process can often be done online before completing the formal loan application.
- Understand the risks and obligations
It’s important to understand the risks and obligations that come with taking on a personal loan. Talk with your cosigner, and make sure you both know the consequences of doing so.
- Consider alternatives
A cosigned personal loan isn’t right for everyone, so consider the alternatives. Options include taking out a line of credit or getting a peer-to-peer loan.
Another option is to ask a friend, spouse, or family member for a loan that will be your sole responsibility. Iron out the loan details — loan amount, repayment term, and interest (if any) — in advance to avoid future conflict.
What are the risks of using a cosigner?
Applying for a personal loan with a cosigner could boost your approval chances, but it does come with certain risks. Here are the main disadvantages of taking out a loan with a cosigner:
- Limited borrowing power: Again, many lenders consider an applicant’s DTI when determining whether to approve a loan application. Since getting a loan, even a cosigned personal loan, increases your DTI, it could make it harder to qualify for other forms of financing.
- Potential credit score impact: A cosigned loan will show up on both parties’ credit reports. Any missed payments could affect both your credit scores. This could make it harder to qualify for other loans or lines of credit in the future, so be sure to borrow an amount you can reasonably pay back on time.
- Risk of debt collection: If you both default on the loan, the account could end up in collections. Not only can this hurt your credit score, but it could also lead to calls from debt collectors. If neither of you pay, the debt collector may be able to file a lawsuit against you. They may also be able to garnish the cosigner’s and your wages or place liens on your properties until the debt is paid.
- Risk of damaged relationships: Personal relationships and money don’t always mix. Taking out a personal loan with a cosigner could add unnecessary stress to your relationship, especially if other financial obligations arise or you fall behind on payments.
Weigh the potential risks and advantages of taking out a cosigned personal loan beforehand to help prevent future problems.
Applying with a cosigner FAQs
Am I required to have a cosigner or co-borrower on a loan?
No, you don’t have to add a cosigner or co-borrower to a loan if you meet the lender’s eligibility requirements. A cosigner can increase your odds of getting a loan, but you might not need one if you have good credit, a low DTI ratio, and steady income.
What happens if I’m late making payments on a loan?
If you miss a payment, or are late by a few days, your lender will typically charge a late fee. If you still don’t pay after 30 to 60 days, the lender could report the missed payment to the credit bureaus, which could hurt your credit score.
Is it easier to get a loan with a cosigner?
Yes, if the cosigner has great credit and verifiable income, applying for a loan with them could make it easier to qualify.
What credit score does a cosigner need for a personal loan?
Cosigners don’t need a specific credit score, but it’s a good idea to find one whose credit score is 700 or above. The higher their credit score, the better your approval chances and loan terms will be.