After moving to the United States, many Expats learn that getting major loans can be difficult because they don’t have a U.S. credit history. As a foreigner who needs an auto loan to buy a new car, one possibility is to get a co-signer for your loan. This requires the primary borrower to ask a friend or family member with a good credit score to sign the loan. Co-signing the loan makes both you and your friend or family member responsible for the repayment.
While a co-signer may sound like the easiest solution, it’s not always a smart idea. Recently, The Fiscal Times published an article “Here’s Why You Should Never Co-Sign a Loan”. The article reveals the pitfalls of co-signing a loan for friends and family and reveals that almost two out of every five co-signers end up making payments on an outstanding balance of the loan.
Asking a loved one to be a co-signer for an auto loan adds undue stress to the relationship, in fact, studies have shown that more than a quarter of co-borrowers have experienced damage to their relationship because of the loan.
Although most people have the best of intentions when asking a friend or family member to cosign, unforeseen circumstances can end up landing the financial burden on the loved one. This is especially the case for expatriates. If your work assignment ends short, or you’re required to go back to your home country for an unexpected reason, your co-signer will be left making the payments on your auto loan.
The good news is there are other solutions for a foreigner in need of an auto loan. International AutoSource (IAS) helps Expats secure an auto loan and purchase a brand-new car without a local credit history, and with no need for a co-signer. IAS can help you finance, lease or rent your car for affordable rates, comparable to what locals pay. Program safeguards include the available repatriation protection on leases, which protects you if your assignment is cut short.
When looking for an auto loan, save your relationships and skip the co-signer.