Updated: Mar 18, 2024

Which Lenders Accept Co-signers for Personal Loans?

Find out which lenders allow co-signers when you apply for a personal loan. Compare alternatives that allow you to borrow without cosigners.

Written By Thomas (TJ) Porter

Finance Expert

Contents

Getting a personal loan can be a big help if you have an unexpected financial need. However, you're still applying for a line of credit, which means that your financial credentials must qualify you for a loan.

If you don’t have great credit, you might have trouble.

One thing that can help is getting someone to co-sign on the loan.

A co-signer agrees to pay the loan if you don’t, and in exchange, you get the benefits of your co-signer’s good credit.

However, not every lender will allow applicants to have co-signers on a personal loan.

Lenders That Accept Co-signers On Personal Loans:

Other noteworthy lenders to consider:

Lender	What You & Your Cosigner Need To Apply	Additional Things To Know
Backed	SSN, home address, date of birth, and phone number Color copy of your photo ID, a copy of your last 3 pay stubs, access to various online accounts to help establish your creditworthiness, utility bill (excluding mobile phone bill) to verify home address, and verification of your email address and bank account	Borrowing amounts from $3,000 to $25,000 Your cosigner must have a FICO score of 720+ and an annual income of $50,000 or greater Backed requires you have no recent derogatory marks on your credit report Loans offered in New York, New Jersey, Florida, West Virginia, Arkansas, and Arizona only Backed is more likely to approve applicant's with a FICO score of at least 660 and an annual income of $18,000 Backed notifies their "Backers" (a.k.a. cosigners) when the borrower misses a payment & will give the borrower a 15-day grace period to make the payment Terms lengths from 12 months to 36 months
FreedomPlus	SSN, home address, date of birth, and phone number Valid ID and verified income and bank account	Borrowing amounts from $10,000 to $35,000 FreedomPlus considers an excellent credit score to be 740+, a very good credit score to be 700 to 739, a good credit score to be 670 to 699, a fair credit score to be 640 to 669, and a poor credit score to be below 639 FreedomPlus encourages cosigners to apply for an application with a borrower To qualify for the lowest APR, a borrower will need excellent credit and have a cosigner who has sufficient income Term lengths from 24 months to 60 months
Mariner Financial	SSN, home address, date of birth, and phone number Government issued photo ID (e.g. driver’s license or passport), Social Security card, proof of residence (e.g. a driver’s license with your current address, a utility bill, or a signed lease), proof of income (e.g. pay-stubs or tax returns), your recent tax return and copy of bank statements	Borrowing amounts from $1,000 to $25,000 Mariner Financial will consider applicants who have previously filed for bankruptcy Loans greater than $7,000 or less than $1,500 are funded through Mariner's branch network For loans greater than $10,000, Mariner requires you back it up with collateral Mariner may accept applicants with credit scores as low as 580 and an annual income as low as $35,000 Terms lengths from 12 months to 60 months
U.S. Alliance Financial	SSN, employment information, income information, and mortgage or rental information Purpose of your loan, loan amount, and requested borrowing term	Borrowing amounts from $500 to $100,000 US Alliance considers an excellent credit score to be 740+ Term lengths from 1 month to 84 months

What is a Personal Loan?

A personal loan is a type of loan that you can use for almost any purpose.

Unlike a mortgage, which is used to buy real estate, or an auto loan, which is used to buy a car, personal loans can be used to buy nearly anything.

You can get a personal loan from a number of companies. Most commonly, you’d apply for a loan from the bank or credit union you keep your accounts at.

You could also look for online lenders who offer personal loans.

What is a Co-signer?

In effect, a co-signer is someone who vouches for your trustworthiness and agrees to take on the risk that you might not pay a loan.

When you apply for a loan, the lender will look at your application and will look at your credit score.

If you have poor credit, the lender will see you as a risk and be less willing to offer a loan. If the lender does offer you a loan, they might charge a higher interest rate or heftier fees.

If you get someone with good credit to co-sign on a loan, what they’re effectively doing is telling the bank “I’m trustworthy, and I trust this person enough to put my money at risk if they don’t pay.”

Co-signer vs. Co-Applicant, what's the difference?

Though co-borrowers and co-applicants are largely the same, they differ slightly from cosigners.

Co-signers act as a backup for the lender. If the person who received the loan fails to make payment, the cosigner then becomes responsible.

Typically, the co-signer does not have an interest in whatever the loan was used to purchase. So, if someone co-signed on a mortgage, they would not have any claim to the house.

When someone co-signs on a loan, the lender will look at both the applicant’s credit and the co-signers credit but will weigh the co-signers more heavily.

Co-applicants have a larger stake

By contrast, co-borrowers and co-applicants apply for a loan alongside the other applicant. When applying for a loan, these people might also be called joint applicants.

Both applicants are equal in this case and the lender will apply similar weight to both people’s credit.

Usually, co-borrowers will have an ownership stake in whatever the loan was used to purchase.

Additionally, if one co-borrower declares bankruptcy, that protection usually applies to the other co-borrower.

Benefits of Having a Co-signer

There are a lot of benefits to asking someone to co-sign on a loan.

Easier to qualify

One of the main benefits is that it makes it much easier to qualify for a loan, assuming the co-signer has good credit.

Even if you have bad credit, having someone with good credit co-sign on a loan gives the bank reassurance that it will get its money back. If you fail to make payments, your cosigner will foot the bill for the lender.

Having this backup in place makes it much easier for the lender to get paid. It won’t have to spend time and money pursuing you for payment or bringing you to court. It will just start sending bills to a new address.

Get a lower rate

If you don’t have trouble qualifying for a loan, getting a co-signer can still help you save money.

The extra security provided by a co-signer means that lenders can charge you less interest.

If your co-signer has excellent credit, you can take advantage of that, getting the lowest interest rates available.

Here's an example. If you were to take out a personal loan from LendingClub for $25,000 for 60 months, this how a cosigner might affect your interest rate:

How A Cosigner Can Affect Your Loan

	Borrowing Amount	Approved APR	Monthly Payment	Total Amount Paid
Without A Cosigner	$25,000	16.30%	$611.94	$36,716.62
With A Cosigner	$25,000	11.45%	$549.19	$32,951.27

This is just to give you an idea of how a cosigner could benefit you. It's possible a cosigner could also help you receive a larger borrowing amount or a shorter payment term.

Why Would You Need a Co-signer?

You would need a co-signer to get a loan if a lender thinks that lending to you alone is too risky.

The most common situation where a lender will require a co-signer is if you have no credit score.

When you turn 18, your credit file is blank, so no lender can tell how likely you are to pay your loans back. You need to find a lender willing to take the risk by lending to you so you can start building credit.

If you can convince someone to cosign on a loan, the lender will overlook your lack of a credit history, instead, looking at your cosigners.

If you get the loan, you’ll then start building your own credit score and will eventually reach the point where you won’t need a cosigner.

Who Can Cosign on a Loan?

Anyone can cosign on a loan, but most commonly it is a family member who will cosign on a loan.

Parents often cosign on their children’s loans to help them build credit and pay less interest. It’s less common for a friend or someone else to cosign because of the risks involved.

Just remember that a cosigner should have a good credit score. The main benefit of having a cosigner is using their good credit to improve your chances of getting a loan, so getting someone with poor or no credit to cosign a loan won’t do much.

How to apply for a personal loan with your cosigner:

Research and compare lenders (like the ones we've listed above).
Prepare all of your financial documents (i.e., you and your cosigner's pay-stubs, tax forms, employment information, and utility bills.
Apply for the loan together, either online or in branch.

Risks of Cosigning on a Loan

If someone asks you to cosign on a loan, you should think twice before agreeing.

When you co-sign on a loan, what you are doing is taking on all of the risks of the loan, without getting any of the benefits.

When things go wrong

If the person who borrows the money doesn’t pay the bills, you’ll become fully responsible for the payments.

If that happens, the lender and credit bureaus will treat you just the same as if you had been the original borrower.

That means that you have to make the minimum payment each month. If you don’t, you’ll owe late payment fees and you’ll see the missed payments on your credit report, damaging your score.

Once you cosign on a loan, you’re locked in. There’s no way to get out of being a cosigner until the loan is paid in full.

Relationship in danger

You’ll want to carefully consider who is asking you to cosign on their loan and how much you trust them. If you have any doubt at all that they might not pay the loan back, politely refuse to cosign.

Also, consider that bringing money into a relationship can change that relationship.

Don’t discount the effect that cosigning on a loan can have on your relationship with the person asking you to cosign.

Pros v. Cons of Having A Cosigner On Your Loan

Pros	Cons
Your odds of getting approved for a loan are much greater Your interest rate will most likely be lower You could get approved for a larger borrowing amount Having a cosigner to help you get approved for a loan could benefit your credit score	Your cosigner is held responsible to pay back your loan if you are unable to Could cause a strain on you and your cosigner's relationship Once somebody agrees to cosign on a loan for you, there is no way for them to get out of it (besides paying off the loan) Your cosigner's credit may be negatively impacted if you don't keep up with monthly payments

Alternatives to Finding a Cosigner

If you can’t find a cosigner or don’t want to ask someone to co-sign on a loan, there are other ways you can increase your chances of getting a loan.

Improve your credit

Though it’s easier said than done, improving your credit score is a surefire way to improve your chances of getting a loan.

While the best way to improve your credit score is to make on-time payments over a long period of time, there are ways to improve your credit in the short-term.

Try to reduce how much you use your credit cards and pay down any large debts you have.

Also avoid applying for a lot of loans in quick succession, since that can hurt your score.

Apply for a secured loan

If you can’t qualify for an unsecured personal loan, try a secured loan.

With a secured loan, you provide something of value, such as title to your car or the balance of a savings account as collateral.

The lender uses this collateral as a guarantee that you’ll make payments. If you don’t make your payments, the lender will take possession of the collateral.

This greatly reduces the lender’s risk, making them more likely to offer you a loan.

Examples of Secured Loans vs. Unsecured Loans by Lender

Lender	Secured Loan	Unsecured Loan
TD Bank	Use your TD savings, Money Market Savings, or TD Bank CD as collateral Variable interest rate $50 origination fee Loan amounts from $5,000 - No maximum	No collateral required Fixed interest rate No origination fee Loan amounts from $2,000 - $50,000
Wells Fargo	Use your Wells Fargo CD or Wells Fargo Savings Account as collateral Loan amounts from $3,000 - $250,000 $75 origination fee	No collateral required Loan amounts from $3,000 - $100,000 No origination fee
PNC Bank	Requires non-real estate entities as collateral Loan amounts from $2,000 - $100,000 Fixed interest rate	No collateral required Loan amounts from $1,000 - $25,000 Fixed interest rate
M&T Bank	Use your M&T CD or M&T Savings Account as collateral Loan amounts from $2,000 - $100,000 Fixed interest rate	No collateral required Loan amounts from $2,000 - $25,000 Fixed interest rate

Try applying at a credit union

Credit unions tend to be more flexible with offering loans and have a vested interest in helping their communities. Go to your local credit union, explain your situation, and ask if they can help.

You might find that the credit union can make something work.

Ask for a smaller loan

If you have poor credit but want to borrow $100,000, you’ll be hard-pressed to find a willing lender.

If you want a smaller amount, like anywhere between $500 and $5,000, more lenders might be willing to take the risk.

Use a credit card

If you absolutely must, you can use a credit card as a last-resort source of money.

Credit cards tend to charge incredibly high-interest rates, so only carry a balance if you absolutely must.

If you can, try to take advantage of a low-APR card.

Conclusion

Getting a cosigner for a personal loan can improve your odds of getting the loan and reduce the amount of interest you pay. Just make sure you understand the risk you’re asking your cosigner to commit to and the effect it may have on your relationship.

About the author Thomas (TJ) Porter

TJ Porter has in-depth experience in reviewing financial products such as savings accounts, credit cards, and brokerages, writing how-tos, and answering financial questions. He has also contributed to publications and companies such as Investment Zen and Echo Fox. He aims to provide actionable advice that can help readers better their financial lives. Education: B.S. in Business Administration, Concentration in Information Systems from Northeastern University.

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