Using a Cosigner Service for Your Apartment Lease Benefits amp Risks
Using a Cosigner Service for Your Apartment Lease - Benefits & Risks Skip to content
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The first step to buying a cosigner is to submit an application. You can submit an application whether you’ve already been told that you cannot qualify for a rental on your own or prior to finding the apartment or home you wish to rent. Along with the application, cosigner services generally charge an application fee, which may range between $50 and $125. 2. Receive Approval
Once you receive approval of your application, you can start your hunt for a place to live. You receive a certificate from the cosigner service that tells the apartment complex or landlord how much of your rental amount the cosigning service guarantees. 3. Rent a Place to Live
Search for your home just as you would without a cosigner, and when you submit the rental application, submit the cosigning certificate with it. If you already found the place you wish to rent, submit the certificate to the landlord or management company for verification of your cosigning arrangement. Sign the lease, and your cosigning service guarantees the lease as your cosigner. 4. Pay Rent
You must pay the monthly rent payment to the landlord, management company, or complex. 5. Pay the Cosigning Company the Cosigning Fee
Cosigning services charge in different ways and at different frequencies. Some charge a percentage of the rent as a one-time, upfront payment that you make to them, such as 10% of the annual rent amount. Other cosigning services spread the payments out on a monthly basis, so you eventually pay 75% to 110% of the monthly rent payment.
In addition to the monthly rental fee, you must typically add anywhere from 6% to 10% of your rental amount to your expenses. Depending on your rent payments, this can add up to a significant amount of cash and make it difficult to afford your rent payments. 2. Cosigning Companies Don’t Guarantee the Entire Lease Term
Some cosigning services only guarantee the rent payment for 90 to 180 days, and some landlords may be turned off by the fact that your cosigner is only guaranteeing 3 to 6 months of a 12-month lease. 3. Upfront Fees Are Nonrefundable
If for whatever reason you do not qualify for the cosigning service, then the upfront application fees are lost. However, some of the fees may be refundable if you are unable to find a landlord willing to rent to you after being approved by the cosigner service. For example, certain service companies may refund the application fee in this instance, while others will not.
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By Kristie Lorette Date September 14, 2021FEATURED PROMOTION
It seems that money can buy almost anything these days, and one such thing available for struggling renters to purchase is an apartment lease cosigner. A cosigner service provides consumers who otherwise cannot qualify to rent an apartment or home with a guarantee of rent payment to the landlord. While it is an interesting and intriguing concept, it’s also important to fully understand how cosigner services work so you can weigh the various pros and cons. Be sure to learn more about the background information – including risks and costs – before jumping in.Who Can Benefit From a Cosigning Service
Whether you qualify as a renter for an apartment or home depends on several personal financial factors. Your credit score is the major contributing factor: If you have a low credit score because you have a poor credit history (or if you don’t have much of a credit history at all), a cosigning service can make the difference between being able to rent a place or being denied. Another primary contributing factor is your rental or home ownership history. Those who are just starting out and don’t have a significant rental history can also benefit from a cosigning service.Motley Fool Stock Advisor recommendations have an average return of 397%. For $79 (or just $1.52 per week), join more than 1 million members and don't miss their upcoming stock picks. 30 day money-back guarantee. Sign Up Now
How It Works
In essence, a cosigner service acts as a lease guarantee program. This means that if you default on your rent payments, the cosigner service guarantees your landlord, management company, or apartment complex that your rent will be paid for a certain period of time. 1. Submit an Application and Application FeeThe first step to buying a cosigner is to submit an application. You can submit an application whether you’ve already been told that you cannot qualify for a rental on your own or prior to finding the apartment or home you wish to rent. Along with the application, cosigner services generally charge an application fee, which may range between $50 and $125. 2. Receive Approval
Once you receive approval of your application, you can start your hunt for a place to live. You receive a certificate from the cosigner service that tells the apartment complex or landlord how much of your rental amount the cosigning service guarantees. 3. Rent a Place to Live
Search for your home just as you would without a cosigner, and when you submit the rental application, submit the cosigning certificate with it. If you already found the place you wish to rent, submit the certificate to the landlord or management company for verification of your cosigning arrangement. Sign the lease, and your cosigning service guarantees the lease as your cosigner. 4. Pay Rent
You must pay the monthly rent payment to the landlord, management company, or complex. 5. Pay the Cosigning Company the Cosigning Fee
Cosigning services charge in different ways and at different frequencies. Some charge a percentage of the rent as a one-time, upfront payment that you make to them, such as 10% of the annual rent amount. Other cosigning services spread the payments out on a monthly basis, so you eventually pay 75% to 110% of the monthly rent payment.
Risks
While a cosigning service can help you rent a place to live, using this type of service has its own set of disadvantages. 1. It Can Be Very ExpensiveIn addition to the monthly rental fee, you must typically add anywhere from 6% to 10% of your rental amount to your expenses. Depending on your rent payments, this can add up to a significant amount of cash and make it difficult to afford your rent payments. 2. Cosigning Companies Don’t Guarantee the Entire Lease Term
Some cosigning services only guarantee the rent payment for 90 to 180 days, and some landlords may be turned off by the fact that your cosigner is only guaranteeing 3 to 6 months of a 12-month lease. 3. Upfront Fees Are Nonrefundable
If for whatever reason you do not qualify for the cosigning service, then the upfront application fees are lost. However, some of the fees may be refundable if you are unable to find a landlord willing to rent to you after being approved by the cosigner service. For example, certain service companies may refund the application fee in this instance, while others will not.