Loan FAQs

What Is a Personal Loan Joint Account?

A co-applicant or co-signer could help you get approved for a personal loan when you can't get approved on your own. Learn how it works.
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Written by:
Anna Baluch
Edited by:
Kristin Marino verified

A personal loan is a versatile financial tool. Whether you take one out to consolidate debt, pay for a home renovation, or cover an emergency expense, it can help you meet your goals.

If you’re worried you won’t qualify for a personal loan with reasonable rates or don’t think you can pay it back on your own, you might want to consider a joint account. With a joint account loan, you apply with a co-applicant who may alleviate some of the pressure.


What Is a Co-Applicant?

Also known as a co-borrower, a co-applicant is someone who applies for a loan with you and is equally responsible for paying it back. If a co-applicant has strong credit and a stable income, they can help you get approved for a loan with a competitive rate and favorable terms.

While your co-applicant can be anyone, ideally you’d choose a family member, friend, or someone you’re close to. The individual should also be a part of or benefit from the goal you’re funding. If you want to use the loan proceeds to remodel your kitchen, for example, your co-applicant may be a spouse who lives with you.


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Reasons to Get a Co-Applicant Loan

There are a number of situations in which you might want to take out a loan with a co-applicant. A co-applicant may be beneficial if:

Your credit is below-average

If your credit score is less than 600, it can be difficult to get approved for a personal loan. A co-applicant can boost your chances of securing a loan you might not be able to get on your own.

You don’t have a credit history

You might not have a credit history because you’re young or recently moved to the U.S. In this case, applying for a loan with a co-borrower is a smart move if you need money.

You want a larger loan

Let’s say you want to borrow $50,000 or more. Since lenders reserve large loan amounts to the most qualified applicants, adding a co-borrower to your application may help you lock in the funding you need.

You can’t prove enough income

If you’re unemployed, self-employed, or freelance you may not be able to show you bring in sufficient income. With a co-applicant, you can prove you have steady cash reserves to make your monthly payments.

You’d like a lower rate

Even if you’re able to get approved for a personal loan, you may need a co-borrower to land a low interest rate and favorable terms. A lower rate can save you hundreds or even thousands of dollars over its life.

Start your joint account personal loan search now.


Pros of Joint Loans

Several of the most noteworthy benefits of applying for a loan with a co-borrower include the following.


Cons of Joint Loans

As with any financial product, joint personal loans come with some drawbacks as discussed below.


How to Apply for a Loan With a Co-Applicant

If you’re interested in a personal loan joint account, here’s how to apply.

Find personal loans that allow co-applicants. Unfortunately, not every personal loan lender accepts co-borrowers. Do your research and find several that do.

Get prequalified. If possible, visit the lenders’ websites and prequalify with your co-applicant. By prequalifying, you can check loan offers without any impact on your credit scores.

Fill out the joint application. Once you and your co-borrower decide on a personal loan, get together and carefully complete the formal application. You will both need to share basic personal and financial details.

Accept a loan. Upon approval, review the terms and conditions of the loan. If you have any questions or something doesn’t make sense, don’t hesitate to ask the lender before you sign on the dotted line.


Frequently Asked Questions

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

Yes. A co-applicant or co-borrower is any individual who applies for a joint loan with a primary applicant. Each party is equally responsible for repaying the loan. They also share equal rights to anything purchased with the loan.

What’s the difference between a co-borrower and a co-signer?

A co-borrower applies for a loan with the primary applicant and both parties share responsibility for paying back what they borrow. A cosigner, on the other hand, does not have to make any payments or have a say in how the loan proceeds are used. They do, however, agree to repay the loan if the primary borrower defaults.

What should you look for in a co-signer?

The ideal co-signer would have a strong financial history with good to excellent credit. They should also have a low debt-to-income ratio as well as stable employment and steady income. Put simply, a co-signer needs to make your application more attractive to lenders.

Who will be responsible for the loan in the event of a breakup?

While nobody likes to think about splitting up, breakups do happen. If you’re married to the co-applicant, what you’ll do with the loan will depend on the laws in your state. If you’re not, however, you’ll need to come up with a game plan for who will be responsible for repaying the loan you took out together.

How can I ask someone to be my co-borrower?

First and foremost, have an honest conversation with them and reveal your income and expenses. This way they’ll understand your ability to repay the loan. Then, agree on how you’ll use the loan proceeds. Lastly, come up with a plan for what you’ll do if you split up or someone is unable to make payments.

What happens in the event of loan default?

Both you and your co-applicant will be liable for the loan you take out. If you fail to repay it, both of your credit scores will likely take a hit. To reduce the risk of default, it’s important to consider both of your current and future finances before you commit to a loan.