We always come across people who have tried to buy cars at other dealers and have been told that they need a cosigner, but have never been told why. Simply having bad credit isn't an actual reason for needing a cosigner.  In fact most who decide to have a cosigner could have purchased a vehicle on their own anyway and simply choose to do so because of better finance terms. You should always look at ALL your options and not rule out the option of a cosigner because it could save you money in the long run. Although we have had situations where a buyer would need a co-buyer, there's usually a way to purchase the vehicle on your own. Here are the top five reasons why people would need a cosigner, and you'll be surprised how little it actually has to do with credit.

1.    Insufficient income

Most banks would require a minimum income based on their program guidelines. It is important to understand that just because you qualify by income, it may not be enough income to be considered eligible to afford a certain car payment. For example, if you are looking for an SUV with bad credit, because it may be higher in price, it may have a larger car payment than what may be considered affordable by the finance company. So, the finance company would then require more income to buy the vehicle you are looking for. Either the buyer would have to make more money, or have a cosigner to combine the income. The finance company would then combine the income to see if the buyers could afford the payment. If you have low income and still want to buy a car without a cosigner? Although there are guaranteed credit approvals, the car payment has to be affordable. If you want that Cadillac with bad credit and low income, save all of your nickels and dimes to put as a down payment in order to assure the lowest payment possible. If the finance company considers it affordable, you could buy the car on your own. Although there are no money down programs, having money down can sometimes help get you better finance terms.

2.    Too many open auto loans

Sometimes a family is in need of a second car or truck, but a finance company would look at the buyer's credit information and notice that they are already making a car payment. They would then say either by income or risk, that they would not qualify for another auto loan. If by income, whatever second auto they choose, they have to make sure the buyer could afford both car payments as if it was one single payment. If by risk, the finance company would see a high risk to the loan and simply ask why the buyer would need two cars. When at high risk, they would suspect that the buyer is buying the new car for someone else. Asking for the cosigner is to have someone else on the loan to stabilize the loan and lower the risk. Still looking for another auto loan and have bad credit? Pick out an affordable and practical vehicle that is much less in payment than what you could afford. Having low car payments in relation to income is a great way to lower risk and one of the easiest way to get a car loan with bad credit.

3.    Recent repossession

Sometimes we make purchases that we probably can't afford, but there are times when we lose our jobs or simply run into hard times and just can't make the payments anymore. There are even times when the car repairs have become too much to afford with a monthly car payment. Now we have a combination of  bad credit because of a repossession and the need to have a car. A cosigner can be used here to help lower the risk. The finance companies would think of the cosigner as the "back up plan" if you happen to run through hard times or as the person they could collect from if you decide to buy something outside of your means. You still want to buy a car without a cosigner and have a recent repossession? This one goes completely by risk. Besides having little money down, lower the risk by choosing a vehicle that still has plenty of warranty, that is affordable and is practical. Think of it as a second chance.

4.    Short Term Job

Nothing is more exciting than starting a new job, but it could be stressful as well. Added to the stress is trying to figure out how to get to that new job. Although Chicago's CTA is still reliable, since they don't run as frequently, missing your bus could make you 30 minutes late to work. Wouldn't it be nice to have your own car even if you have bad credit? Here you may need a cosigner because of stability. Unless you had a long term job prior to the recent job, you may be considered high risk because of multiple short term jobs. Look at it this way:  If you fall behind on your car payments, how could they feel confident that you would be able to make the car payments? Or even find the vehicle if they needed to. You still want to get a bad credit auto loan with a short term job? This one goes by risk and collectability. Besides having little money down, lower the risk by choosing a vehicle that still has plenty of warranty, that is affordable and is practical. Living at the same residence for a long time and having some money as a down payment also helps.

5.    Cash job - Can't prove income

Most finance companies want to know where the income is coming from because they need to know if the car payment will be affordable. It is important to understand that just because you qualify by your stated income, having bad credit may require you to prove where it's coming from. Finance companies will accept SSI benefits, Child Support, retirement and 1099 payments as acceptable income. BUT you still have to be able to afford the car payment. For example, if you are looking for a luxury SUV with bad credit, because it may be higher in price, it may have a larger monthly car payment than what may be considered affordable by most bad credit finance companies. So, in this case a cosigner who can prove their income would help. If you have a cash job, bad credit and still want to buy a car without a cosigner? There are guaranteed credit approvals, but the car payment has to be affordable. Get some type of statement from your employer that shows your status, your income and how long you have been at the job. Although these bad credit loans are higher risk, you could still get an auto loan with your cash job.