Chocolates, socks, weekends – some things are better in twos!
Well, what about your personal loan? Many borrowers opt for a joint personal loan with a co-applicant – typically a family member. By doing so, the co-applicant also becomes liable for the loan repayment. Should you take a joint loan? How will it benefit you? Find the answers in this article.
Things to know
When you get a co-applicant on board, your eligibility for the loan improves. Before you proceed, know these two important things –
a. Credit score:
The credit score of your co-applicant can affect the chances of your loan approval. Yes, you read that right. If your co-applicant has a poor credit score, it can significantly diminish your chances of getting a loan. Thus, it is vital to check your partner’s credit score before you join forces with them for a loan.
b. Responsibility of repayment:
Neither of you should forget the fact that the burden of paying monthly EMIs rests on both of you. If any one of you fails to pay their part of the monthly EMI, the other borrower should be ready to complete the payment on the partner’s behalf. It goes without saying that defaulting on payments will affect both your credit scores.
Additional Read: How to Choose the Best Personal Loan for Needs?
Benefits of taking out joint loans
There is much to be gained from getting a personal loan with a co-applicant. Let’s take a look –
a. Higher loan amount
Since there is more than one applicant in a joint loan, lenders usually sanction higher loan amounts relatively quickly. The combined income of both individuals, along with the creditworthiness, will be crucial to loan approval here. If both members applying for the loan meet the eligibility criteria, or if either is a woman, you are likely to get a higher loan amount at attractive personal loan interest rates.
b. Ease of repayment
The responsibility of paying off the loan is not limited to just one person but falls on both applicants. Thus, individually, both applicants get to enjoy lower monthly EMIs and a shorter tenure. This also drastically reduces your interest obligations and helps you get rid of debt relatively quickly.
Additional Read: 5 Ways in Which Personal Loans Can Help You Save Money
The bottom line
Joint loans are certainly a great option to navigate complex financial situations. However, it is best to avoid taking out such loans in case you are retiring soon, are in debt already, or have a bad credit situation. This is important as rejection can carve a dent in both yours and your applicant’s credit history.
So, if you are applying for a joint loan, make sure that you have your finances in order first. To understand your repayment obligations, make use of Tata Capital’s online personal loan EMI calculators. Contact us to know about our smooth application process, flexible tenures, and unparalleled services. Find tailored personal loans at Tata Capital and meet your financial needs with ease. Simply log on to our website to know more!