Best Joint Personal Loans Of October 2022
While it is common for one person to appear on a personal loan application, there are instances when you may want to include a co-borrower. For example, you may want to include your spouse, who will be equally responsible for the debt obligations. If you apply for a joint personal loan, lenders consider both the applicants’ income and credit history.
Keep in mind: A co-borrower or joint borrower is not the same as a co-signer, who takes shared responsibility for the loan, but doesn’t actually use any of the money.
When you’re shopping for a personal loan with a co-borrower, remember that both applicants are expected to meet repayment obligations.
How to Apply for Joint Personal Loan
While the process may vary depending on your specific lender, here are the general steps you can follow to get a joint personal loan:
- Check the credit scores of both borrowers. Start by checking the credit scores of both borrowers through each individual’s credit card provider or other credit-providing website. This will help you understand which lenders you may qualify for or not, as lenders consider the credit history of both applicants.
- If necessary, improve borrowers’ scores. If one of the borrowers has a score below 610 or you want to raise both of your scores to get the most favorable terms, take the time to improve your scores before applying. You can do this by taking various steps, such as reducing your credit utilization or paying off unpaid debt.
- Assess your budget. Before finding the right lender, assess your budget and understand how much loan you can afford. Borrow only what you need because you will owe interest on the entire balance. A personal loan calculator can help you estimate your monthly payments.
- Get pre-qualified with multiple lenders. Some lenders offer a prequalification process, which lets you see what terms you can get after being approved without a hard credit check. Use this as a way to find the best offer for your situation.
- Submit your application. Once you find your preferred lender, submit an application online or in person. Usually there will be an option to apply for a joint Personal loan or add a co-borrower. Both borrowers must be prepared to provide their personal information, such as their Social Security Numbers (SSN), address and income information.
Tips for Comparing Joint Personal Loans
Consider these tips when comparing joint personal loans:
Both borrowers must be able to qualify.
Because lenders consider information from both applicants, both borrowers must meet that lender’s minimum credit score requirement. If you have a qualifying score, adding another borrower with strong credit and income history can help you get more favorable terms, such as lower interest rates.
You cannot use a co-signer.
While co-signers can help you qualify for a loan if you have damaged credit, the lenders on this list that offer unsecured Joint personal loans won’t let you apply with a co-signer. Co-signers are usually eligible on secured loans, including auto loans, mortgages or home equity lines of credit.
If possible, pre-qualify.
Some lenders offer you the opportunity to pre-qualify for a personal loan. This means that you can submit details like your income information, desired loan usage, housing status and other information. Prequalification also only requires a soft credit check, which doesn’t hurt your credit score, so you can safely find the best rates.
Check for additional fees.
Some personal loan providers charge no origination fees, late payment fees or prepayment penalties. However, there are some that may charge all or some of these fees. When comparing Joint personal loans, be sure to look at the fee structure beyond the potential interest rate you can receive.
Evaluate the lender’s customer support options.
If you have found a lender,
there is one more thing to consider before signing the loan agreement. Customer support may not seem like a big deal, but it can make a huge difference if you run into payment problems or face financial hardship during your repayment period. Review the lender’s customer service resources and read reviews to make sure they are a good fit.
Related: Compare Nab Personal Loan
Methodology
We reviewed 18 popular lenders based on 14 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and application process. We’ve selected lenders that allow co-borrowers and ranked them based on the weight assigned to each category:
- Loan Cost: 35%
- Loan Details: 20%
- Eligibility and Accessibility: 20%
- Customer Experience: 15%
- Application Process: 10%
Within each category, we also considered several characteristics, including loan amount, repayment terms, APR range and applicable fees. We also looked at minimum credit score requirements and the lender’s geographic availability. Finally, we evaluated each provider’s customer support tools, borrower benefits and features that make the borrowing process easier—such as prequalification and mobile apps.
Where appropriate, we awarded partial points based on how well the lender met each criterion.
Joint Loan Vs. Personal Loans
A joint personal loan is a loan that involves two borrowers—a primary borrower and a co-borrower—applying on one application. In the case of a joint application, the lender will consider both the applicants’ credit scores, income and overall credit history for qualification purposes. Both borrowers are equally responsible for the obligation and repayment of the debt.
On the other hand, a personal loan involves only one borrower. However, on a personal loan, the borrower can add a co-signer — a secondary person who agrees to repay the loan if you fail to do so — for more favorable terms if they don’t meet the minimum eligibility requirements. to receive.
Co-borrower Vs. Co-signatory
A co-borrower is usually used when two parties want to directly benefit from the loan. This means that while the co-borrower has equal rights to use the property purchased with the loan, they also share the responsibility of repaying the loan. Co-borrowers are usually your spouse, and the credit scores of the primary borrower and co-borrower are considered equally during the application process.
A co-signer is usually a friend or family member who helps the applicant—usually someone with poor credit or no credit—qualify for a loan by agreeing to pay the loan if the borrower doesn’t. Additionally, co-signers have no ownership rights over the assets purchased with the loan and are not liable to make payments unless the primary borrower defaults. Lenders generally rely more on the co-signer’s credit score during the application process.
Related: Best Home Flexi Loan 2022
Advantages of a Joint Loan
If you question whether it is better to apply for a loan individually or jointly, you can consider some of the advantages of joint loans.
A joint loan can be ideal for a homeowner couple who plans to make some home improvements. Often, when more than one person is borrowing money, there is more income to consider, which may mean you can secure a larger loan amount or get more attractive deals on credit. If so, your dream kitchen, conservatory or loft conversion can become a reality if you apply for a personal loan.
Joint personal loans can also be used for other purposes such as debt consolidation and can help you secure money even if you’ve been turned down before, with a personal loan application or have experienced bad credit in the past.
An affordability check is done to find out whether you and your loan partner can afford the joint loan repayment.
Disadvantages of a Joint Loan
Although sharing the payment responsibility can be an advantage in terms of securing a large amount of money, it can also be a disadvantage of a joint personal loan as the loan requires full repayment regardless of events in the individual relationship.
Both parties are responsible for the loan, rather than a 50% split or share, and so by signing a credit agreement for a joint personal loan, you both agree to repay the loan if the other can’t or won’t pay. This can sometimes lead to complaints, conflicts and tensions in relationships that have broken up but are repaying joint personal loans. This also applies in the event of an accident or death, so it is very important to be fully aware of the terms of the loan and the obligation to repay the full amount to avoid any complications.
Another potential disadvantage is that it does not matter which person spent the money and who owns the property purchased with the joint personal loan amount. In terms of who pays what, both members are responsible.