As a millennial, securing a loan is generally no easy task. Whether it’s for college, a mortgage, or some other worthwhile investment, most lenders are pretty tough on your generation. It also doesn’t help that because of your age, you probably don’t have much of a history to go on for negotiating favorable rates.
In short, if you do get a loan, it’s often going to become a burden.
3 Ways to Use a Cosigner to Earn Better Rates
You should do everything in your power to avoid high-interest loans. No matter how badly you think you need the money, the consequences of bad rates can last a long time.
Fortunately, this is where a cosigner comes in.
Simply put, a cosigner guarantees that you’ll pay back the debt. If you don’t, the cosigner takes over that responsibility, reassuring the lender that they get their money no matter what.
Given the terms involved, you’ll probably find your cosigner among family members or close friends. Obviously, it has to be someone who trusts you.
Provided you find one, here are three ways to use a cosigner to get better rates on your loans.
1. Student Loans
Just about everyone needs student loans to attend college. Unfortunately, that doesn’t make them any more affordable. Many people have even referred to student loan debt as a legitimate crisis.
While it’s definitely possible to take out a student loan without a cosigner, it’s hardly recommended, given the state of things.
Of course, you can also use a cosigner to refinance your student loan, so don’t automatically assume you’re stuck with the terms you originally agreed to. Even if you enjoyed better rates by using a cosigner the first time, you can still low them even further by again using a cosigner to refinance.
College may often be expensive, but it’s nothing compared to the price of most homes. For the vast majority of people, their home is the most expensive thing they’ll ever buy.
As a millennial, this is an especially challenging purchase. Even if you have a decent credit history for the lender to consider, you are most likely still trying to ramp up your income.
Taking out a mortgage with a cosigner is essential, given how much you’d have to otherwise pay on such a large loan.
3. Building Better Credit
As we’ve touched on numerous times already, lack of credit is a serious disadvantage for millennials.
Fortunately, it’s a problem easily solved with a cosigner.
By taking out smaller loans you know you can pay back in a short period of time, you can begin building up your credit. Having a cosigner will help with this.
If you’re a millennial with bad credit, having a cosigner can help you get a credit card, which is a major step toward repairing your credit.
Never Sign for a Loan Before Considering a Cosigner
Unless you are absolutely sure about the rates a lender is offering you, never commit to a loan without considering the benefits of utilizing a cosigner. There are a number of scenarios where an extra signature can make a huge difference in such an important financial matter.