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A joint loan is any unsecured or secured personal loan that is taken out by more than one person, and are a popular source of finance for people who are making shared purchases. This may be a couple buying a new family car, or business partners looking to renovate a shared property.
The main benefit of a joint application loan is that you’ll likely be able to get a larger loan amount or better rate when you share the responsibility of paying it back. This is because many lenders view a joint application as less risky. Your income as a pair is likely to be greater, and you’re less likely to both run into financial trouble.
Many popular banks and lenders offer joint personal loans. You can search for the lender that you have in mind using the table below.
The range of joint loans available on the market is more limited than the range available to individuals borrowing on their own. That’s primarily because some lenders simply don’t accept joint applications.
But the good news is that a decent number of them do. As well as regular unsecured, fixed-rate personal loans, there are specialist lenders which provide joint personal loans for bad credit and there are even some payday lenders accepting joint applications as well.
These are regular personal loans that are offered by banks and other lenders, generally for amounts from £1,000 to £25,000. Most personal loans offer terms of 1 to 5 years, which is the amount of time you’ll have to repay the loan amount.
With a secured loan, the borrowers offer an asset as collateral against the cost of the loan. This means the lender can take ownership of the asset if you fail to repay the loan. When it comes to a joint secured loan, it’s therefore best to offer an asset that’s jointly owned by the two applicants, such as a property or family car.
Mortgages, for example, are very often issued to joint applicants (for many couples it’s the only way to access the sums required to fund a property purchase), and could be considered a form of joint secured loan.
The advantage of a secured loan is that it is considered less risk for the lender, meaning you’ll generally receive a more competitive interest rate, and will also be able to borrow more compared to an unsecured personal loan.
A debt consolidation joint loan may be suitable for couples with separate loans looking to combine their debt into one loan. If you can find a loan with more favourable terms and rates, you may be able to save on interest, and can make your debt repayments more manageable.
If both applicants have bad credit history, a joint loan may improve your chances of being approved for a loan, as a lender may consider you more likely to meet your repayments than you would as individuals. However, if only one applicant has bad credit, a joint loan application may not be the best idea, and it may be better if the person with good credit applies individually. You can then agree to repay the loan together.
While joint loans operate much like regular personal loans, there are a number of differences in terms of the application process and your liability as borrowers:
When you apply for a joint loan, both applicants will need to submit their personal and financial details. However, for the purposes of the application, the two applicants are essentially judged as one individual.
In many cases, this can be beneficial, as your combined annual income will often be bigger than that of an individual borrower. This may positively affect the rate you receive and the size of the loan you can be approved for.
However, if one applicant has a bad credit record, the lender may reject your joint application, even if the other has a sparkling record. In this situation, it’s likely better for the individual with the good credit score to apply on their own.
Once you’ve taken out a joint loan, all future individual credit applications will also consider the other applicant, until the loan is fully paid off. Your credit file is linked to theirs for this time period. Another reason not to apply for a joint loan with someone who has bad credit.
As with any other type of loan, both applications will need to meet certain eligibility criteria in order to apply for a joint loan. All applicants will need to be:
Different lenders will also have certain requirements you will need to meet, which may include a minimum income limit. You may also need to describe and provide evidence of your relationship as part of your application.
With joint loans, both parties are liable for the full loan amount. If your co-applicant can’t or won’t meet the repayments, the lender has full rights to chase you for the remaining balance. This is called “joint liability” and it applies no matter what your relationship with the co-applicant is.
If your business partner runs into debt, if your spouse dies or if your girlfriend runs off with the milkman, you’ll still be expected to foot the bill. With this in mind, you should only apply with someone who you trust not to leave you in the lurch.
It is possible to remove yourself from a joint loan if the co-applicant and the lender agrees to new terms. This may involve a pay-off for either party and/or a re-financing deal so that the remaining applicant can continue to meet repayments.
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