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The Impact of Car Title Loans on Co-Signer Credit Scores

Daniel Joelson

Daniel Joelson

Total Posts: 325

Published Date: May 14, 2023

Daniel Joelson has been in consumer finance since 1994, he is one of the leaders in car title loans. With great knowledge and years of experience, he is able to help people different financial problems. Being an expert in car title loans, he is able to write extensively about them.

Categories: Car Title Loans

The Impact of Co-signers’ Credit Scores With Title Loans

The Impact of Car Title Loans on Co-Signer Credit Scores can be positive and negative, so it is important to be fully aware.

Car title loans are a popular option for individuals in need of immediate funds, even with bad credit or a short credit history. These loans involve the borrower pledging their car as collateral in exchange for a loan amount. To be eligible for the loan, borrowers must possess a clear title to the vehicle, and the loan amount is determined by the vehicle’s value. In some cases, lenders may request a co-signer to help secure the loan.

Effect on Co-signers’ Credit Scores

When a co-signer agrees to co-sign for a car title loan, they become jointly and severally liable for the loan repayment alongside the primary borrower. If the primary borrower defaults on the loan, the lender can pursue the co-signer for repayment. This can have a negative impact on the co-signer’s credit rating if they are unable or unwilling to make payments. The co-signer’s credit score may also suffer if the lender reports missed or late payments. Late payments and repossession can remain on the credit reports of both the borrower and the co-signer for up to seven years.

Self-Protection as a Co-signer

If you are considering co-signing for a car title loan, it is essential to recognize the risks involved and take precautions to safeguard yourself. Here are some pointers for preserving your co-signer credit score.

If you have a dispute with the co signer, or with the person you are co signing for , you need to address them straight away.

Be aware of the loan’s terms before agreeing to co-sign

Take the time to understand the loan’s terms, including the interest rate, repayment schedule, and any additional costs or penalties. Carefully read through all loan documents and address any questions or concerns you may have.

The Impact of Car Title Loans on Co-Signer Credit Scores
The Impact of Car Title Loans on Co-Signer Credit Scores

Keep track of loan payments

As a co-signer, it is crucial to monitor loan payments to ensure they are being made on time. Consider setting up automatic payments or reminders to help ensure timely payments. Maintain contact with the borrower to ensure their ability to make payments and discuss any potential problems that may arise. Collaborate with the borrower to find a solution if they are having trouble making payments.

Have an exit strategy

In case things don’t work out as you had hoped, it is important to have an exit strategy in place. This might involve having a plan to seize control of the vehicle if necessary or saving money in case the borrower makes a late payment.

Monitor your credit score and reports

Regularly monitoring your credit score will help you ensure that no late payments or adverse information is being reported. Keep an eye on both your credit score and credit reports. Address any problems or discrepancies you find immediately.

Conclusion About The Impact of Car Title Loans on Co-Signer Credit Scores

Co-signing a car title loan can significantly impact your credit score and financial situation as a co-signer. However, by being aware of the risks and taking precautions, you can minimize the negative effects. Carefully review the loan’s terms, keep track of payments, maintain communication with the borrower, have an exit strategy, and monitor your credit score to protect yourself in the event of default.

Trading Financial Credit, LLC may act as the broker for the loan and may not be the direct lender. Loan proceeds are intended primarily for personal, family and household purposes. Trading Financial Credit, LLC does not offer or service student loans. California loans are made or arranged pursuant to a California Financing Law License : 603-8192. Arizona: Loans made pursuant to Arizona Department of Financial Institutions.

New Mexico: Loans made pursuant to New Mexico Regulation and Licensing Department Financial Institutions Division Small Loan Company License. Small Loan License 02069

*Credit approval is subject to Trading Financial Credit, LLC credit criteria standards. Actual loan amount, term, and Annual Percentage Rate of the loan that a consumer qualifies for may vary by applicant. Minimum loan amounts vary by state. Consumers need to demonstrate ability to repay the loan.

*Application processes could take five (5) minutes to complete. Upon completion, a conditional approval may be given pending review of documentation. Funding time is based on the time from final approval following receipt and review of all required documents and signing, prior to 5PM PST on a business day.

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