How to Get a Personal Loan with No Cosigner
Posted by Rohit Mittal
Most traditional lenders require cosigners for loan applicants with bad credit. Students and immigrants are particularly vulnerable to depending on a cosigner, as they tend to have little or no credit history in the US. Unfortunately, those who need a cosigner the most are often unable to find one. Students and immigrants might not know US citizens with good credit and are forced to find alternatives that don’t require a cosigner.
This brief guide will show you how to get a loan without a cosigner.
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What is a Cosigner?
A cosigner is a person assuming co-responsibility for your loan. He or she is liable to make payments to the bank on your behalf, in case you fail to do so. Cosigners tend to be people you trust like family or friends; people who will take into account your situation, and be willing to take on a bit of risk so that you can be approved for a loan.
A cosigner with a strong financial background can help you secure a loan at better interest rates. Their credit history offsets your credit history, and a lender takes into account both when they decide to greenlight a loan.
Groups That Struggle to Secure Cosigners
Unfortunately, not everyone is able to easily secure a cosigner. Two of the groups who struggle the most include:
If you fall into either of these categories, don’t feel bad — you’re not alone!
Immigrants are new to the United States and usually have not had time to create a network of people with a credit history. They’ve just arrived to the States, have no credit history of their own, are attempting to set up a life, and have yet to create strong, trusting relationships with potential cosigners.
A cosigner has to be someone with a US credit history, while also being someone willing to take a risk on you. If you’ve only been in the US a short while then it’s quite possible you haven’t had a chance to socialize and network with people who may then become willing to cosign for you.
Students tend to be young meaning they have had little time to accumulate a credit history. Most teenagers are deemed too irresponsible to be given large credit which means they haven’t built a financial reputation. It’s difficult for students to get their first loan without a reputation to stake it on.
Ironically, students tend to be in most need of a loan. They are training for their careers and are not pulling in much more than a part-time minimum wage. Students need cars, residences, and student aid which require payment plans.
If a student has not had to pay off any credit previously, then it will be hard to sell a lender that you will be able to hand the responsibility.
4 Ways to Get a Loan Without a Cosigner
If you are a student or immigrant struggling to find a cosigner while also carrying the burden of a lack of credit experience, the task of getting a loan can be daunting. But with research and the right help, you can secure a loan. There are options out there for you:
- Online lenders
- Secured loans
- Credit unions
- Payday loans
Each of these options is discussed in detail below.
1. Online Lenders
There are online lenders that cater to students and immigrants. Whereas banks treat you like your credit score, online lenders take into account other aspects of your life.
They look at your income, employment status, and reasons for needing the loan while also offering competitive interest rates.
Online lenders have to compete with banks and other online lenders. If you do your research and find the right company, you could be surprised that you not only get a loan but one with favorable conditions.
2. Secured Loans
Although you may not have a cosigner, you may have something of value that can act as collateral to secure a loan. Whereas a cosigner acts as a reference to help you successfully receive a loan, a secured loan uses possessions like cars, boats, and motorcycles to mitigate a lack of credit experience.
As an immigrant or student, you may not have had time to form the trusting bonds that need to be formed to find a cosigner. You may, however, have an item of value that you can risk to secure a loan.
In essence, this valued possession acts as a cosigner. It means you are willing to have that item repossessed if you default on your loan.
3. Credit Unions
Credit unions can be a direct antidote to those struggling with finding a cosigner. Credit unions are designed for people who share similar characteristics with similar financial interests to join a collective that supports them.
Especially if you are an immigrant of a certain ethnicity, there are credit unions across the United States that are designed to accommodate the financial handicaps that come with your circumstance.
If you apply and are accepted as a member, then you can receive financial assistance from a fellowship that shares common demographic characteristics.
4. Payday Loans
Payday loans are an option, albeit a risky one, for those having trouble finding a cosigner. Payday loan providers sell themselves as a quick and easy stop for cash on the spot, and there is some truth to that. With a driver’s license, social security card, and a post-dated cheque, you can leave with cash in hand.
However, with extremely high interests rates, relying on payday loans can be like stepping in quicksand. The quick fix option is exactly what they provide to hook you into further mounting debt.
3 Online Lenders That Don’t Require Cosigners
If you choose to go the online lender route for getting a personal loan, you’ll have a few options:
Each of these lenders is discussed in detail below.
Stilt is an online lender catered to students and immigrants with a lack of credit experience. Stilt provides loans to international students and working professionals in the U.S. (F-1, OPT, H-1B, O-1, L-1, TN visa holders) at rates lower than any other lender.
Avant is a competitive online lender that upon acceptance, pays you within a day. The only issue is their focus is on credit scores with the 600 to 700 range, not those without credit experience or 600 or below credit scores.
For those with bad credit and no credit, Badcreditloans.com handles the worst cases. The site is not a lender itself but is a peer-to-peer platform, one that will link you up to lenders willing to give chances. If you do not have a cosigner, Badcreditloans.com is a potential avenue for you.