Loan options that don’t require a cosigner
While some lenders may require a cosigner, some offer loans specifically designed for independent borrowers.
Federal student loans
Federal Direct Subsidized and Unsubsidized Loans don’t require a cosigner. These are loans given directly to applicants to help pay for college or university.
Credit unions and community banks
A credit union is a not-for-profit financial institution that offers deposits, loans and other financial services just like banks. However, unlike banks, credit unions generally do not have shareholders. Loan requirements for credit unions may be less stringent than those of other lenders.
Some credit unions are available to anyone, while others may only accept people in a particular region or industry.
Secured loans (loans backed by collateral)
A secured loan is a loan backed by collateral, such as a car or home. If the applicant is unable to pay back the debt on a secured loan, the lender is entitled to repossess the collateral.
Depending on the lender and type, some secured loans may not require cosigners. Common types of secured loans are home equity loans, mortgages, auto loans and savings-secured loans.
Income-based loans
Some lenders offer loans based on an applicant’s current income rather than their credit history. While these loans might have higher fees or interest rates, they may be more accessible to applicants without a longer credit history. Lenders will need proof of stable employment and regular earning statements to qualify.
How to improve your chances of getting a loan without a cosigner
If you don’t qualify for a loan right away, there are steps you can take to build your credit and strengthen your application without a cosigner.
Build your repayment history
Repayment history is one of the most important things a lender looks at when determining an applicant’s eligibility for a loan.
Open a credit card or become an authorized user on someone else’s account to start making consistent, timely payments and building a repayment history with credit reporting agencies.
Look for ways to add to your income or savings
Having a higher income or savings can lower your risk to a lender. Consider picking up a part-time job or freelance gig to supplement your income. The more stable your employment history and income, the more likely you may be to get approved.
Reduce your debt-to-income ratio
If you’re already carrying a high amount of debt, it may affect your credit utilization and debt-to-income ratio, which may make it difficult to borrow more money. Try to pay off as much existing debt as possible before applying for a new loan.
Alternatives to traditional loans
If securing a loan without a cosigner proves difficult, consider these alternative financial solutions.
Scholarships and grants (for students)
If you’re a student, loans aren’t your only option to help pay for college. Look into federal, state and private grants and scholarships. Federal and state governments offer scholarship search tools, and local foundations and nonprofits may be a source of additional help. Reach out to your school’s financial aid office for more information.
Employer tuition assistance or paycheck advances
Some companies may offer education assistance as part of their benefits package. This means the company will help offset the cost of additional schooling. Some employers also offer or partner with lenders for short-term loans to their employees, freeing up money from an upcoming paycheck in advance. Talk to your company’s HR department to see what options may be available to you.
Peer-to-peer lending
Peer-to-peer (P2P) lending is a type of loan where an applicant borrows money from an individual rather than an institution like a bank or credit union. Specialized P2P lending websites may be able to connect borrowers with lenders directly, and they may offer lower eligibility requirements and interest rates than traditional banks.
Borrowing from family or friends
Another option is borrowing money from family or friends. Keep in mind, however, that you may want to draw up a formal agreement so that all the parties involved know exactly what the expectations are for the loan.
Applying for a loan without a cosigner
There are many options available for loans without a cosigner. Online lenders, building credit and income history and researching loan alternatives may all be options for getting the money you need. Citi doesn’t currently allow applicants for a Citi® Personal Loan to apply with a cosigner.
This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
