Joint loan applications

Whether you’re looking to finance a car, do some home renovations or pay for a vacation, there are different ways to secure financing. Applying for a personal loan as part of a joint application could help you check off more eligibility boxes than you could on your own. Joint loan applications are also a way for you and your partner to assume equal financial responsibility for a large purchase.

But joint personal loans are not the same as a cosigned loan. With a joint personal loan, all borrowers must meet credit requirements on their own. Read our guide to find out how joint application loans work and which features you should take into account before applying.

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Can I fill out a joint loan application with bad credit?

Lenders will evaluate the eligibility of both applicants, and typically require that either both applicants have a good credit score, or one has an excellent credit score if the other has bad credit. Whether or not you’re approved also depends on how heavily the lender considers credit scores in its approval process. You can explore more bad credit personal loans options here.

How joint loan applications work

You can apply for a joint personal loan as long as you and your partner meet the lender’s requirements. Before you get started, compare providers by prequalifying for a few options together.

Once you select a lender, you both need to provide the same information about your employment and personal finances on the joint application. Depending on the lender, this can be done all at once or separately. The lender will consider the application details as a whole when underwriting the loan.

Is it better to apply for a loan individually or jointly?

Whether you should apply for a loan individually or jointly depends on your relationship with your co-applicant, your credit scores and personal finances.

If you plan on sharing the expense with your co-borrower, joint loan applications make more sense than applying on your own. Applying with a co-applicant can also help you get a lower interest rate and origination fee if you have a limited credit history or low credit score.

But if your credit score is higher, applying with a co-borrower can actually hurt your personal loan application.

4 loan features to know about joint loan applications before you apply

Before you submit any joint loan applications, there are a few things to consider:

• If you’re approved, you will assume equal responsibility for the loan with the person you are applying with. This means if either one of you becomes unable to make the repayments, the other is still responsible for the rest of the repayments.
• Both applicants will need to collectively meet the criteria for the personal loan.
• You may be eligible for a higher loan amount when submitting a joint personal loan application. It’s important not to borrow more than you need or can afford, even if you’re approved for it.
• Joint personal loans are a serious responsibility. Consider the relationship you have with the person you’re applying with and their financial situation. Is their job stable? What is their credit history like? Are they likely to default? These are the things you may need to think about when taking on the responsibility of a joint loan.
• Both applicants have the right to receive information about the loan interest and any other costs they’ll have to pay, along with the same loan statements on an ongoing basis.

What are the benefits of joint loan applications?

Joint personal loans can be a viable option for several reasons, including:

• Increase your chances of approval. If you are on a lower income, self-employed or just want to increase the strength of your application, a joint personal loan is one way to increase your chances of being approved for a loan, since the details of both applicants will be considered by the lender.
• Share an asset. If you’re planning to share the asset you’re purchasing, such as buying a car with your partner, a joint application could make more sense than one of you applying by yourself. Consider your own personal situation to decide what will work best for you.
• Be eligible for a larger loan. You may be eligible for a larger loan if you apply with a partner. Since you both agree to manage the repayments, the lender will consider the income and financial situation of both applicants when deciding how much money to lend.
• Consolidate large debts. If you and your partner both have large debts separately, you may both be able to save by applying for a joint debt consolidation loan. You can split the monthly repayment according to how much debt you contributed to the loan and benefit from the reduced interest rate and fees.

Bottom line

Joint loan applications can be a convenient option for people who want to share equal responsibility in a large purchase. If you have a lower income, joint personal loans can help bolster your application and increase your chance of approval. However, it’s important to think about who you’re entering into the agreement with. Both of you must have the ability to manage the loan in order to make it a viable option.

As with every loan opportunity, be sure to compare your personal loan options before making your final decision.

Frequently asked questions about joint loan applications

• Can two people with bad credit get approved for a loan?

  Two people with bad credit will likely not get approved for a standard loan, but may be able to get approved from alternative lenders who specialize in bad credit personal financing.

• How is a joint application loan different than a loan with a co-signer?

  Joint applicants are equally responsible for the payments, and whatever's purchased with the loan is considered owned by both borrowers. A co-signer, on the other hand, is only responsible for the loan if the main borrower defaults on the loan.

• How do I get out of a joint loan?

  One option is to refinance the loan under the other borrower only. This transfers the debt to a different lender and allows the agreed upon person to be solely liable for the remaining balance of the loan.