At certain points in your life, especially if you’re just starting out, you may need a co-signer for a loan or other financial transaction. But what if you don’t know anyone who is willing or able to co-sign? Or what if you don’t want to strain your relationship with a friend or relative by asking them to do it? What are your alternatives?
- If you’re having difficulty obtaining a loan or renting an apartment on your own, getting a friend or relative to co-sign isn’t your only alternative.
- In the case of an apartment, see if you can sublet from, or room with, someone who already has a lease.
- You also may be able to hire a professional co-signer service to guarantee your rent.
- If you want to borrow money and conventional lenders have rejected you, then peer-to-peer lending might be an option.
When Could You Need a Co-Signer?
Suppose you want a car loan so you can drive to work. Public transportation where you live is poor; relying on it severely limits where you can work, compromises your safety, or takes up way too much of your free time. You’re convinced that you can make the loan payments, but you don’t have quite enough income to qualify.
Perhaps you have just graduated from college and are trying to get your first apartment. You’re no longer eligible for student housing, but you don’t yet have a job and can’t convince any landlord to https://getbadcreditloan.com/payday-loans-ga/valdosta/ take a chance on you despite your solid grade point average.
Or maybe you’re trying to get back on your feet after unemployment or health problems depleted your savings and led to you defaulting on loans, damaging your credit history and making it impossible to get a new loan or a place to live.
Four Alternatives to Having a Co-Signer
Fortunately, even if finding a co-signer would be difficult or impossible, you still have options. Here are four of them.
1. Become a Subtenant or Roommate
If you’re after an apartment, then you can try finding a situation where someone else already is fully obligated to pay the lease but is looking for help with the rent. You might be able to sublease from someone who is traveling or had to move unexpectedly and couldn’t get out of their rental agreement. You also might be able to rent a room from someone who will occupy the apartment with you but doesn’t need to add your name to the lease.
In these cases, since the landlord already has a signed agreement from someone who has passed a credit check, paid a security deposit, and promised to pay the rent for the full lease term, they may not check your credit or even care who occupies the place as long as they’re receiving rent checks on time each month from the original renter.
Ask the individual you want to sublet from or room with for a copy of the lease, to make sure you won’t be violating it. The person on the lease should get written permission from the landlord before you move in, and you should sign a sublease or roommate agreement with the tenant. Be aware of the possibility that if you’re paying the person on the lease rather than paying the landlord, they could conceivably take your money and not remit it to the landlord.
2. Use a Co-Signer Service
To secure an apartment, you could also hire a co-signer service. For a fee, they will guarantee to your landlord that they will pay your rent if you do not. You must apply for approval with a co-signer service, and there is often an application fee. If you’re approved, then the service will give you a co-signing certificate to submit with your rental application. It’s up to the landlord whether to accept your co-signer.