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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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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.
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.
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.
Frequently asked questions about joint loan applications
Lenders will evaluate the eligibility of both applicants. Whether or not you’re approved depends on how heavily the lender considers credit scores among other factors. You can also explore bad credit personal loans for alternative options.
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.
Leanne Escobal is a publisher for Finder. She has over eight years of experience working in financial services as a marketer. Leanne has completed the Canadian securities course (CSC®) as well as the personal lending and mortgages course by the Canadian Securities Institute. She has a Bachelor of Arts (Honours) in English literature and creative writing from Western University.
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