How to Get a Joint Personal Loan
Quick Answer
You can get a joint personal loan by applying with a co-borrower. When lenders consider both of your credit scores, incomes and debt levels, you may qualify for better loan terms together than you could get on your own.
A joint personal loan is a loan you apply for with someone else. You and your co-borrower share the loan proceeds and the responsibility for making payments.
Applying for a joint personal loan involves the same steps as applying for a personal loan on your own, except that the lender considers both borrowers' credit scores, incomes and debt levels when reviewing your loan application. This could help you qualify for better interest rates or a larger loan amount.
What Is a Joint Personal Loan?
A joint personal loan is a loan you take out with another person, called the co-borrower. Both borrowers' names appear on the loan documents, both can use the loan money and both are responsible for repaying the loan. You might have a better chance of qualifying for a personal loan if you apply with a co-borrower, because the lender will take both of your incomes, credit scores and debt-to-income ratios (DTIs) into account.
Important to know is that joint personal loans are different from cosigned personal loans. A cosigned personal loan is disbursed to the primary borrower; the cosigner doesn't have access to the money. The primary borrower is responsible for loan payments, while the cosigner doesn't make loan payments unless the primary borrower fails to do so.
Learn more: Co-Borrower vs. Cosigner: What's the Difference?
How to Get a Joint Personal Loan
Follow these steps to get a joint personal loan.
1. Choose a Responsible Co-Borrower
Applying for a joint personal loan with a co-borrower who has good credit, a regular income and a low DTI can help increase your odds of loan approval. Your DTI indicates how much of your gross income goes toward debt payments every month. You typically need a DTI below 36% to qualify for a personal loan with favorable terms. Because both borrowers are responsible for loan payments, look for a co-borrower who reliably pays their bills on time.
2. Check Your Credit
Both you and your co-applicant should review your credit scores before applying for a joint personal loan. Start by checking your credit report and FICO® ScoreΘ, which you can do for free with Experian. You typically need a credit score of at least 580 to be eligible for a personal loan.
Scores of 700 and up can help you qualify for better loan terms, such as low interest rates or larger loan amounts. If your credit score needs improvement and you're not in a rush to get funding, consider taking six months or so to work on it before you apply for a personal loan. Paying down credit cards, bringing late accounts current and paying bills on time can help give your credit score a boost.
3. Determine How Much Money You Need
To avoid borrowing more than necessary (and paying interest on it), carefully assess how much money you need. For instance, if you and your spouse are applying for a joint personal loan to pay off credit cards, add up all the card balances. Keep in mind that loan origination fees are typically deducted from your personal loan proceeds, so you may need to apply for a larger loan to get the amount you want. If a $10,000 loan you're considering has a $750 origination fee, for example, you'll receive $9,250 when your loan is disbursed.
Learn more: How Much Can I Borrow With a Personal Loan?
4. Review Your Budget and Estimate Monthly Payments
Research current personal loan interest rates to get an idea of the rate you and your co-borrower may be eligible for based on your credit scores. You can use a personal loan calculator to see how different interest rates impact your monthly payments and the total cost of borrowing. Go over your budget with your co-borrower to see how much you can realistically afford to pay every month.
Personal loan calculator
5. Get Prequalified and Compare Offers
Getting prequalified for a joint personal loan with multiple lenders can give you an idea of your options before you officially apply. Prequalification won't affect your credit score, since it requires only a soft credit inquiry. After being prequalified, you can compare loan offers, including annual percentage rates (APRs), monthly payments, fees and penalties.
Learn more: How to Prequalify for a Loan
6. Apply for the Loan
Once you've found the best personal loan for your needs, you and your co-borrower can formally apply, typically on the lender's website. Usually, you'll need to provide the following information for each borrower:
- Name, birth date and Social Security number
- Driver's license or other government-issued photo ID
- Contact information
- Employment status and income (pay stubs, W-2 forms, bank statements or tax returns may be required)
- Housing status, including monthly rent or mortgage payment
- How much you want to borrow
- Desired repayment term
7. Review the Offer and Accept the Loan
When your application is approved, carefully review the loan terms and conditions with your co-borrower to be sure it's what you expected. Once you both sign the loan agreement, the next step is receiving your funds. Depending on your lender, your joint personal loan funds might be disbursed the same day you sign, the next day or within a few business days.
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Pros and Cons of Joint Personal Loans
When considering a joint personal loan, be sure to evaluate both the benefits and downsides.
Pros
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Shared financial load: Having a co-borrower lightens your financial burden compared to making payments on your own.
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Can help you qualify for a loan: If you have poor credit, a low income or a thin credit file, a co-borrower could be the solution to getting your loan approved. Lenders often perceive joint personal loans as lower risk because if one borrower can't make payments, there's another borrower to do so.
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Potential for better loan terms: Even if you could get a personal loan on your own, adding a co-borrower with a solid income and good credit might qualify you for lower interest rates or a bigger loan.
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Can benefit your credit scores: A joint personal loan appears on both borrowers' credit reports and may help improve your credit mix, which could boost your credit scores. Timely loan payments can also benefit both borrowers' credit scores.
Cons
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May damage your relationship: Problems repaying the loan or disagreements about how to use the money could hurt your relationship. Before applying for a joint personal loan, honestly talk about issues that might arise and how you would resolve them.
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One co-borrower could potentially be liable for the entire debt: If your co-borrower doesn't pay their share, you'll be on the hook for the full amount, potentially straining your budget.
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Can hurt your credit scores: Applying for a joint personal loan results in a hard inquiry into each applicant's credit, which can cause a small but temporary dip in credit scores. Late or missed payments will also negatively impact both borrowers' credit scores.
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Removing a co-borrower can be difficult: If you and your co-borrower separate, divorce or stop being friends, it can be difficult to remove them from the loan. You'll typically need to refinance the loan in your own name, which could be a problem if you can't qualify on your own.
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Raises DTI for both borrowers: Taking on new debt increases your DTI and may make it harder to qualify for other loans.
Learn more: How to Get a Loan With Bad Credit
Where to Get a Joint Personal Loan
You can get joint personal loans from most major banks and credit unions, as well as through online lenders, some of which specialize in personal loans. Credit unions and online-only lenders may offer lower interest rates and fees, or you might prefer a brick-and-mortar lender. A bank where you already have an account can be a good starting point, but don't stop there. Comparing joint personal loan offers from multiple lenders will help you get the best rates and terms.
Learn more: Alternatives if You Can't Qualify for a Personal Loan
Frequently Asked Questions
The Bottom Line
A joint personal loan could help you and your co-applicant qualify to borrow more money with better loan terms than either of you could get on your own. However, it's important to choose a trustworthy co-borrower, since each borrower's actions will impact the other's credit.
Whether you decide to get a joint personal loan or go it alone, shopping around is a good way to find the most favorable loan terms and interest rates. Experian can help you get matched with loan offers based on your credit profile. It's an easy way to compare personal loan options from multiple lenders with no impact to your FICO® Score.
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About the author
Karen Axelton
Karen Axelton specializes in writing about business and entrepreneurship. She has created content for companies including American Express, Bank of America, MetLife, Amazon, Cox Media, Intel, Intuit, Microsoft and Xerox.
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