Personal Loans

How to Get a Joint Personal Loan

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A joint personal loan lets you borrow money with someone else and pay off the loan together. It can up your borrowing power by presenting a lender with a greater combined income, more assets and a potentially stronger credit profile. That, in turn, might land you better loan terms, like a lower APR.

Personal loans can be used to pay for almost anything. However, before taking out a joint personal loan, make sure you understand what this entails, who’s responsible for what and how a co-applicant is different from a loan cosigner.

What is a joint personal loan?

A joint loan is when you and another borrower assume equal responsibility in repaying a loan. Each of you will have your creditworthiness assessed and sign the same loan documents. Because you’ll each have equal responsibility for the loan, you’ll typically share whatever the loan was used to purchase.

If you’re applying jointly for a mortgage, this could help you get approved for a larger mortgage. It would also mean that both you and the other borrower would have an equal stake in the property.

In the case of a personal loan, if you have a weak credit score, a lender may be more willing to approve you for a personal loan if your co-applicant has a strong credit history. In the same way, your joint application with two incomes can make a lender more likely to give you a bigger loan.

What can go wrong with a joint loan?

As with any partnership — business or personal —  a co-applicant relationship can sour over time or even come to an end. If that happens, you’ll need to determine how best to split the debt over the remaining repayment term.

A joint personal loan can also get complicated when it comes to credit. One borrower’s bad credit might mean higher interest rates for both of you, and it’s possible a lender might deny you a joint loan because of your co-applicant’s poor credit standing. Falling behind on payments — or defaulting — might cause both your credit scores to take a hit.

Here’s a look at both the pros and cons of this type of borrowing relationship:

Joint personal loans: The pros and cons
Pros Cons
  • Present lenders with a higher qualifying combined income
  • Offset a second borrower’s weaker history
  • Allow borrowers to come up with a larger down payment
  • Could sour the relationship between co-applicants
  • Might make loan approval less likely if one borrower has poor credit
  • Lead to a credit score drop for both borrowers if loan payments are late, or if the loan defaults

Is a co-applicant the same as a joint borrower?

Yes. A co-applicant, or joint borrower, is anyone who applies for a joint loan along with the primary applicant. Each party then bears equal responsibility in repaying the loan.

Is a joint loan a cosigned loan?

No. A cosigner on a loan is different from a co-applicant. A loan cosigner takes on responsibility for the loan without any ownership claim on whatever is purchased. If you have poor credit, a cosigner with excellent credit might help you qualify for a loan you might not otherwise receive. On the downside, a cosigner is also responsible for making sure the loan gets repaid, so if you default, your cosigner’s finances or credit will also take a hit.

Where to find a joint personal loan

3 joint personal loans
APR Terms Borrowing amounts Credit history
LendingClub 10.68%–35.89% 36 or 60 months $1,000 to $40,000 May be a good choice for strong-credit borrowers
LightStream 3.99%–19.99% 24 to 144 months $5,000 to $100,000 Might be best for borrowers with good-to- excellent credit
OneMain Financial 18.00%–35.99% 24 to 60 months $1,500 to $20,000 Potential option for borrowers with poor-to-fair credit

LendingClub

LendingClub is a peer-to-peer lending company, which means that unlike a bank, credit union or online financial institution, your joint personal loan will instead be financed by another person or institutional  investors. In comparison to the other two lenders in the chart, LendingClub offers the broadest range of annual percentage rates (APRs). (APR is a more accurate measure of your loan costs, as compared to a loan’s interest rate.)

If you are approved for a loan and it’s funded, you’ll receive funds in a minimum of four days.

LightStream

LightStream is an online division of Truist Bank (formerly SunTrust Bank). It offers home loans, auto loans and personal loans for a range of needs. It also offers the broadest range of repayment terms on a personal loan, 24 to 144 months, plus same-day funding after loan approval.

LightStream offers lower rates than both OneMain Financial and LendingClub, but you’ll need good-to-excellent credit to qualify. The company’s Rate Beat program offers rates that are 0.10 percentage points lower than those offered by competing lenders, provided borrowers have already been approved for those loans.

OneMain Financial

OneMain Financial offers personal and joint loans in smaller amounts than both LightStream and LendingClub, with generally shorter loan times, too. OneMain Financial also offers the possibility of same-day funding.

When you apply for a OneMain financial personal loan online, the application lets you specify you’re applying with a co-applicant.  You and your prospective joint borrower can start your application for a loan online before visiting a branch to complete the process and close on the loan.

How to apply for a joint personal loan

  • Check your rate: Go to your lender’s website to confirm that they allow co-applicants and, if possible, determine the rate the both of you might receive based on your credit scores and joint personal information.
  • Fill out the joint loan application : Check the “joint” or “co-application” box so you and your co-applicant can both provide any information required.
  • Review your offers: If you receive multiple loan offers, you and your co-borrower should review each one carefully and agree to the terms that best suit your needs. For a loan with OneMain Financial, you’ll meet in-person with a loan specialist to discuss options, verify documents and provide proof of any needed collateral. Once you’re approved for a loan, your lender will do a hard credit inquiry, which will cause your credit score to temporarily dip.
  • Accept a joint loan agreement: Once you’ve accepted a joint personal loan, you and your co-borrower will sign your loan agreement together. At this time, you’ll also need to set up your loan for funding, by deciding the bank account you’ll use for regular monthly repayments.
 

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