When it comes to getting a student loan these days, you may want to consider using the buddy system. As credit markets have tightened many lenders are now requiring that borrowers without strong credit records have a cosigner – someone who agrees to step in and make your loan payments if you don’t. Even if you have good credit, having a cosigner may help you qualify for lower interest rates. Finding a cosigner may add a few steps to your loan process, but it may be a good idea – if not downright necessary – to have one. Here are 7 tips for getting a student loan with a cosigner:
1. Look close to home
Most student loan cosigners are parents or relatives of the borrower. A good cosigning candidate will have a steady income and an excellent credit score – think somewhere in the 700s.
2. Be clear about the commitment
Make sure your cosigner knows what he or she would be committing to: paying off your student loan if you don’t. A cosigner should also be aware that – for better or for worse – the loan will show up on his credit record too.
3. Make your case
Show your student loan cosigner exactly how you intend to pay the loan back after you graduate. This will help him feel less anxious about making the commitment andwill also force you to plan for the future.
4. Shop around
It’s always smart to spend some time looking for the best student loan terms possible. But when you’ve involved another person in the deal, it’s essential.
5. Apply together
Student loan lenders are going to want as much information about your cosigner as they do about you. Pick a time to sit down together and fill out the paperwork.
6. Keep communicating
Once you’ve got the loan, keep your cosigner updated on your progress in school and toward finding a post-graduation job. This will help put him at ease and remind you of your accountability.
7. Let them off the hook
Many private student loans allow cosigners to be released from their liability once the borrower has made two years worth of good payments. Let your cosigner know when you’ve reached the 24-month mark, and don’t forget to thank him for helping you finance your education.