Best personal loans for borrowers with a cosigner

Not all lenders offer cosigned loans. Find out which lenders do and what you should consider before asking someone to be your cosigner.

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You may need a cosigner to qualify for a personal loan if you have poor credit. Learn more about getting a personal loan with a cosigner. (iStock)

Getting a personal loan with a cosigner can make it easier to borrow money when you have poor credit or a limited credit history. A cosigner is someone who agrees to add their name to a loan application to help you get approved for a loan at a favorable interest rate. This is different from a co-borrower, who takes out a loan with you for a joint purpose — such as a married couple buying a home together. 

Not all personal loan lenders allow cosigners, but some do. If you're interested in applying for a personal loan with a cosigner, here’s how it works and what you can expect. 

You can compare personal loan rates from multiple lenders when you use Credible.

Best personal loans for borrowers with a cosigner

Be sure to comparison shop for a personal loan so that you can find the right fit for you. Compare rates, repayment terms and other important factors to ensure that the loan will fit within your budget. The following six lenders are Credible partners that allow you to have a cosigner on your personal loan

FreedomPlus

FreedomPlus can fund loans in as little as two business days, so it's a good option if you need money fast. 

  • Loan amounts: $7,500 to $50,000
  • Loan terms: Two to five years
  • Minimum credit score: Does not disclose
  • Best for: Borrowers who want fast funding

LendingClub

LendingClub offers peer-to-peer personal loans, which could translate to lower interest rates if you or your cosigner have a strong credit score. 

  • Loan amounts: $1,000 to $40,000
  • Loan terms: Three or five years
  • Minimum credit score: 600
  • Best for: Borrowers with good credit scores and low debt-to-income ratios

LightStream

LightStream provides personal loans of up to $100,000 with no prepayment penalties, origination fees or late payment fees. 

  • Loan amounts: $5,000 to $100,000
  • Loan terms: Two to seven years (12 years for home improvement loans)
  • Minimum credit score: 660
  • Best for: Borrowers who need a large loan

Happy Money, formerly known as Payoff

Happy Money, formerly known as Payoff, offers some of the lowest personal loan rates around, which could help you save even more on interest if you're consolidating credit card debt. 

  • Loan amounts: $5,000 to $40,000
  • Loan terms: Two to five years
  • Minimum credit score: 600
  • Best for: Borrowers who want to consolidate credit card debt while building their credit

PenFed

PenFed offers loans as small as $600, so it might be best if you don’t need a large loan. 

  • Loan amounts: $600 to $50,000
  • Loan terms: One to five years
  • Minimum credit score: 670
  • Best for: Borrowers who only need a small loan amount

SoFi

SoFi offers larger loans with up to seven years to repay what you borrow. 

  • Loan amounts: $5,000 to $100,000
  • Loan terms: Two to seven years
  • Minimum credit score: Does not disclose
  • Best for: Borrowers who need a longer loan repayment term

Other lenders to consider

The following two lenders are not Credible partners, so you won't be able to easily compare your rates with them on the Credible platform. But they may also be worth considering if you're looking for a personal loan with a cosigner. 

First Midwest Bank

First Midwest Bank extends unsecured personal loans (no collateral required), and you can check your rates without affecting your credit score.

  • Loan amounts: $5,000 to $35,000
  • Loan terms: Up to seven years
  • Minimum credit score: Does not disclose
  • Best for: Borrowers who want to pay off credit card debt

Laurel Road

Laurel Road offers a 0.25% autopay discount and has no prepayment penalties. 

  • Loan amounts: Up to $45,000
  • Loan terms: Three to five years
  • Minimum credit score: Does not disclose
  • Best for: Borrowers who want to pay off their loan early

Methodology

Credible evaluated the best personal loan lenders based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms and fees. Credible’s team of experts gathered information from each lender’s website, customer service department and via email support. Each data point was verified to make sure it was up to date.

What to look for in a cosigner 

The goal in getting a personal loan with a cosigner is to qualify for the best possible rate and loan term. Narrow down your list of potential cosigners to those with good credit, as this is typically the biggest factor in a lender’s decision. A "good" FICO® credit score falls in the 670 to 739 range. Meanwhile, a score of 740 or higher is considered very good to exceptional. 

Ideally, your cosigner is a family member or friend who pays their bills on time and in full each month and is generally responsible with their money. It also helps if they have a steady income and have been at their current job for at least a year.

With Credible, you can compare personal loan rates from multiple lenders in minutes.

Considerations before getting a personal loan with a cosigner

Having a cosigner can improve your odds of getting approved for a personal loan and help you qualify for the best rates possible. But asking someone to cosign a personal loan isn't something to take lightly — when someone cosigns a loan, they become equally responsible for the debt. 

Sharing responsibility for a personal loan can have some negative implications for your cosigner if you're unable to pay the loan back. Here are some of the key things to keep in mind when weighing whether to get a personal loan with a cosigner:

  • Approval odds — It's important to consider how a cosigner's credit history might affect your chances of being approved. A cosigner whose credit score is just a few points higher than your own may not give you much of an edge.
  • Interest rates — Consider what rates you may be able to qualify for based on your cosigner’s credit score. You can use a personal loan calculator to estimate your monthly payment with different interest rates before applying.
  • Ability to pay — Before taking out a personal loan with a cosigner, do the math to figure out if you can afford the monthly payment based on your current budget. Though a cosigner puts their name on a loan, ideally you’ll be able to repay it without them.
  • Shared responsibility — If you default on a cosigned loan, your cosigner will be responsible for repaying the loan. Choose a cosigner who’s willing and able to repay the loan in the event that you can’t.
  • Credit score impact — A cosigned loan will show up on both your credit report and your cosigner's credit report. If you pay late or start missing payments, your cosigner’s credit score can take a hit.
  • Relationship strain — If you're unable to pay back your personal loan, leaving your cosigner to repay it, that could harm the relationship you have with that person. The loss of the relationship in the long term may not be worth the convenience of getting a personal loan in the short term.

Aside from these considerations, you should also take the time to compare lenders and loan terms. Specifically, look at how much you can borrow with a cosigner, whether rates are fixed or variable, how long you'll have to repay the loan and how much you might pay in fees. Before signing on the dotted line, make sure you understand all terms of the loan so there are no surprises down the road. 

Who can be a cosigner?

If a lender allows cosigners for personal loans, the cosigner may need to meet certain guidelines, such as a minimum age and U.S. residency. But generally, your cosigner can be any of the following:

  • Spouse
  • Partner
  • Parent
  • Sibling
  • Aunt or uncle
  • Cousin
  • Friend
  • Coworker

Regardless of how the person is connected to you, a cosigner should be someone that has a good credit score and will agree to add their name to the loan. Remember, a cosigner puts their credit on the line for you, so think carefully before you ask someone to be your cosigner. 

When you’re ready to shop for a personal loan, check out Credible to compare rates from different lenders.