Will I need my wife to co-sign on an auto loan?

Submitted by LuckTrain85 t3_yiclf8 in personalfinance

In a nutshell, I'm just wondering what DTI would be acceptable for a new auto loan by myself so I can avoid adding my wife to the loan.

I recently had to co-sign on her auto loan as she is also on our mortgage and it appeared that her DTI was too high without my income. Now that it is my turn to get my vehicle, I'm wondering if this is going to impact my ability to get the loan myself.

It's not a big deal either way, but just curious. Annual income (solo) is $193K and DTI with the new vehicle is ~41%. With my wife's income it is <30% including new vehicle. Thanks!

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93195 t1_iuhy2tc wrote

At $193K, you should be fine for a moderate sized car loan. If you had to co-sign for your wife, she almost certainly has no value as a co-signer for you. If you’re not fine, adding her as a co-signer won’t help.

The point to a co-signer is getting someone with better income and credit than you to guarantee the loan. If you co-signed for her, that means you have better income and credit than her, not vice versa.

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LuckTrain85 OP t1_iui2dme wrote

Thanks for the input! My wife has excellent credit and a reasonable income for the car she was buying. I just happen to make significantly more and our mortgage payment (which she is a co-signer on) would not be sustainable for her to take on alone plus her auto loan from the viewpoint of creditors. Without me in the picture, it looks as if she's paying most of her income to debt.

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93195 t1_iui5cmx wrote

Yup. So adding someone who already appears to be paying most of her income to debts doesn’t help you or the bank.

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LuckTrain85 OP t1_iui6ft6 wrote

Ahh that's interesting. I think I was looking at it in a different way -- as her additional income (and lack of additional debts) would provide a more favorable DTI. Thank you.

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Werewolfdad t1_iuhxxca wrote

Depends on the lender. You’ll have to ask them.

Some go to 36%. Some go over 50%

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LuckTrain85 OP t1_iui1zx7 wrote

Thanks! Wasn't sure if there was some sort of standard, will do.

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Coronator t1_iuhy2ya wrote

I think it depends on your credit score, but 41% is definitely high and would likely raise some flags, however banks in general aren't quite as stringent with DTI with auto loans as they are mortgages. You might get away with it (doesn't hurt to try).

I assume you are in a HCOL area? You are certainly servicing a lot of debt!

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LuckTrain85 OP t1_iui325h wrote

Thank you, I really appreciate the input. I'm not in a HCOL area, but you're correct, we do have a mortgage, a car payment, student loans, and a balance on a couple of cards which add up.

Going way beyond the DTI conversation, but I'm an early reservation holder for a Rivian vehicle and am locked into 2019 pricing for it. I'll be turning this around for a profit as these vehicles (used) have been reselling for 40-60K over original MSRP.

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coasterboard t1_iuifiol wrote

Your household income is over 200k and you're not just buying the car outright?!

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