Does a co signature spike intrest rate?

Question

Looking for a loan. I have no credit. My mom is going to co sign with me on 7000. Will the intrest rate be higher bc I am on the account too?

what should intrest rate b on 7000?

Answer 1

Intrest rates will be high for you until you have a score higher than 650 or so. The only thing a co-signer with credit is doing is saying that if you don't pay your bank, then they will pick up the slack for you.

Answer 2

Yes it will likely be higher, but not for the reason you're thinking.

Example: a bank is issuing 6% interest loans. You have no credit, so they won't qualify you. They will qualify you WITH a cosigner, but they'll also charge you a higher interest rate (say, 8%) based on your own lack of credit.

The cosigner is simply additional insurance that they can get somebody to pay on the loan if you default. This is because without a cosigner, even with a higher rate to cover the chance you'll default, you're still too high of a risk.

No credit is the great unknown. It's similar to you not wanting to loan money to a person you've never met before, because you've never known them and can't find anyone who will vouch for them. But you may gladly lend $20 to a friend you've known your entire life, because they've paid you back in the past.

Answer 3

The interest rate will be higher not because she co-signs with you but because you don't have good enough credit to get the loan by yourself.

Answer 4

If your under 21 that might be fine.
If either co-signer has a history of bad checks, criminal record, divorce, illegal drugs, alcohol, separation, then it might drag either side down.
Credit is your ability to pay the loan company, as in job, tax information, and compensation. Thats all you need to reveal, or college plan such as transcript or ID.