Title loans offer a way to borrow money instantly, using your vehicle as collateral, while you keep possession of the car. 

If you’re unable to secure a title loan on your own, you may apply with a co-signer. This can be a family member or a trusted friend who agrees to take on the responsibility of the loan if you’re unable to repay it.

This provides another option for bad credit borrowers who don’t qualify for a loan on their own, but need funds today.

How Do Title Loans Work?

When applying for a title loan, lenders primarily focus on two factors: the car’s value and your ability to repay the loan.

These criteria are often more important than other factors, including your credit history, making it possible for borrowers with poor credit to secure a loan.

If you aren’t eligible for a title loan on your own, consider adding a co-signer to your application. This can increase your chances of approval, and lead to better terms.

What Is a Title Loan With Co-signers?

A co-signer is an individual, usually a family member or a close friend, who agrees to sign the title loan documents with you. In the lender’s eyes, they are the safety net, ensuring loan repayment if you become unable to pay the loan as agreed.

Co-signers don’t receive any of the loan proceeds, but they share responsibility for the debt. To qualify, title loan lenders evaluate the income and credit history of both borrowers. The shared responsibility may increase your chances of loan approval.

However, co-signers take a risk; missed payments can negatively affect both the borrower’s and co-borrower’s credit scores.

Who Can Be a Co-signer?

You may ask anyone to be a co-signer on a title loan; however, use caution. When someone cosigns a loan, they agree to be financially responsible for it if you don’t pay.

For example, you may consider a close friend or a family member as a co-signer, but there aren’t any restrictions as to who can be a co-signer. It can also be a colleague or a neighbor who is willing to take responsibility for your loan.

What Must the Co-signer Submit to the Title Loan Company?

When applying for a title loan with a co-signer, it’s essential to know what the co-signer must provide. 

The required documentation for the co-borrower is the same as what the borrower must provide. This is because the lender must assess the co-borrower’s ability to repay the loan if necessary. This means stepping in if you don’t pay the loan as agreed.

The required documentation is the same as what the borrower must provide, since the lender must assess the co-borrower’s ability to repay the loan if necessary.

This Includes:

  • A signed credit application to allow the lender to pull their credit
  • A government-issued ID, such as a driver’s license, state ID, or passport
  • Proof of income, such as pay stubs and W-2s or other income
  • Proof of vehicle ownership including a title in your name
  • Pictures and information about the vehicle to prove its value

Considerations Before Having Someone Cosign a Title Loan

Asking someone to cosign on a title loan is a big decision. Here are some factors to consider.

Financial and Legal Responsibility

You are financially responsible for the payment on the car title loan, but the co-signer is responsible, too. Together with the co-signer, payments must be made no matter what.

While it’s primarily the borrower’s responsibility if the payments aren’t made on time, the co-signer is responsible, and the title loan lender can take legal actions. This includes sending the account to collections or filing a lawsuit against one or both parties.

Credit Implications

Title loan companies don’t report title loans to the credit bureaus. However, there’s an exception.

If you fail to make the loan payments according to your contract and the lender sends the loan to a collection agency, it will likely report on both the borrower’s, co-borrower’s and co-signer’s credit reports. This means the borrower’s and co-signer’s credit could be negatively affected.

Collections are one of the most serious delinquencies on a credit report and can cause a credit score to decrease drastically. The effect varies by person as it’s based on many factors, including the amount of the loan agreement that was defaulted and the borrower’s past credit history.

Communication and Trust

Requesting someone to cosign a loan for you requires trust on the co-signer’s part. Communication and transparency are key to ensuring you are on the same page.

For example, let the co-signer know why you need the funds and your plan to repay the loan.

If you can’t make your payments but aren’t honest with the person who cosigned the loan, it may cause issues within your relationship. Open communication and honesty are keys to making it work.

Alternative Options

Before asking anyone to cosign your loan, consider your alternatives. Consider asking the person who may cosign for a personal loan from them instead, or consider asking for payment arrangements from the creditor you need to pay immediately.

For example, if you have a medical emergency, talk with the medical institute about a payment plan that spreads the money you owe over a longer period, allowing you to repay the debt without borrowing a title loan with a co-signer.

This eliminates putting loans on any car titles and reduces the risk of losing your car if you can’t repay the loan.


Benefits of Having a Co-signer on a Title Loan

If you’ve exhausted your options and need to get a car title loan with a co-signer, here are some of the benefits you may find.

  • Increased Loan Approval Chances: If you don’t qualify on your own, a co-signer with good qualifying factors may increase your chances.
  • Possibility of Lower Interest Rates: Decreasing the risk of defaulting on your loan agreement allows lenders to offer lower interest rates, but remember that title loan rates are higher than other loan options.
  • Borrow More Money: An increased ability to repay with an additional income may increase the amount you can borrow, but it won’t be more than 25% to 50% of the vehicle’s value.

Potential Risks and Downsides

There are several factors of title loans that are downsides. Here’s what to consider.

  • Risk to the Co-signer: Co-signers take a lot of risks agreeing to share responsibility for your car title loan. You are equally responsible for the repayment, and if you can’t make them, it’s on the co-signer, or they risk ruining their credit.
  • High-Interest Rates and Fees: Title loans have high interest rates and fees, increasing the cost of borrowing money. On average, title loans have 25% monthly interest rates or a 300% APR.

Can I Get a Title Loan With Two Names on the Title?

The short answer is, ‘Yes, you may get a title loan with two names on the title,’ but it depends on how you hold the title.

  • Title says ‘or’ between owner names: If your vehicle’s title says ‘or’ between your name and the other owner’s name, either party may apply for a title loan.
  • Title says ‘and’ (or ‘/’) between owner names: If your vehicle’s title says ‘and’ or ‘/’ between your name and the other owner’s name, both parties must apply for and sign the loan agreement for the title loan.

How to Apply for a Title Loan With a Co-signer

To apply for a title with a co-signer, consider the following steps:

  • Choose a Lender: Compare your options, including the APR, fees, and loan terms. Choose the loan with the lowest fees but terms that won’t create more financial strain.
  • Gather Required Documents: You must prove you qualify for a title loan. This includes providing proof of income, such as W-2s, paystubs, or award letters for you and the co-signer and proof of ownership by providing the vehicle title.
  • Contact the Lender: Many lenders have an online title loan application process, but check with the title loan lender to determine the steps.
  • Complete the Application Process: Follow the lender’s instructions to complete the application process for the borrower and co-signer, including how to provide documentation, such as uploading online or mailing them to the lender.
  • Sign the Loan Agreement: Once approved, you and the co-signer sign the loan agreement and the lender will fund the loan according to their timeline.

FAQs

Is Approval Guaranteed for a Loan with a Co-signer?

No, approval for a title loan with a co-signer is not guaranteed. While having a co-signer can improve your chances, approval depends on several factors. These include both parties’ credit histories, their ability to repay the loan, and the value of the car that’s used as collateral.

Can a Co-signer Get the Title?

No, co-signers do not have any claim to the vehicle’s title. While they provide a guarantee to repay the loan if the primary borrower cannot, co-signers don’t gain any ownership rights. They also don’t have the ability to obtain the vehicle’s title. The title remains solely in the name of the primary borrower.

Can a Co-signer Put up Collateral?

A co-signer doesn’t put up the collateral. Only the primary borrower or the person applying for the loan can provide the collateral (the vehicle title). The co-signer is there to help improve the chances of approval by accepting responsibility for the loan.

What Is the Difference Between a Guarantor and a Co-signer?

The difference between a guarantor and a co-signer is how quickly each becomes responsible for the debt. 

A co-signer is responsible for the debt immediately after signing the loan agreement. While the borrower should make the payments, the co-signer is equally responsible for every payment. 

A guarantor, on the other hand, is only responsible if the primary borrower defaults on the loan agreement, usually after missing several months of payments.

What Happens if the Co-signer No Longer Wishes To Be Associated With the Title Loans?

When deciding if you qualify to remove a co-signer from your title loan, your title loan lender is the decision-maker. Since they approved you based on both person’s qualifying factors, the lender must determine if you qualify without the co-signer.

If the lender allows it, you will complete their paperwork to remove the co-signer. This may include the need to prove ownership of the vehicle again and provide proof of income.

Can a Co-signer Be on the Title Loan but Not on the Title Itself?

A co-signer can be on the title loan but not on the car title. A co-signer doesn’t have rights to the vehicle. Instead, they serve as a guarantee to the lender if the borrower doesn’t repay the loan.

What Happens to the Co-signer When the Car Is Paid Off?

After paying off the title loan, all co-signers get is the peace of mind knowing they aren’t on the hook for your liability. The car is yours to do what you want, including selling it after receiving the title from the title lender.

The Bottom Line

Considering a title loan with a co-signer isn’t a decision to take lightly. It’s possible to ask someone to sign the loan with you, but only consider it if the repayment terms are feasible so you don’t risk your family member or friend’s credit and finances.

If you find yourself without the funding you need and have a good co-signer, check out Montana Capital’s easy online application process that, if approved, may get you funds in as little as five hours if you have a clear approval by 2 PM Eastern Time.

We are here to assist you in securing a title loan with a co-signer. We’ll support you through the process, which we’ve made easy to navigate. As a licensed lender, we are here to help with any questions or concerns you have.

Written by Samantha Hawrylack

Written by

Samantha Hawrylack

Samantha Hawrylack writes for our company and is an expert in personal finance. Sam received her Bachelors of Science in Finance and her Masters in Business Administration from West Chester University of Pennsylvania. She began her career in the financial services industry and shifted to an entrepreneurial role where she could directly impact clients. Sam has an impressive background in personal finance and business management.