Personal Loans

How to Get a Joint Personal Loan

If you want to borrow money with someone else and commit to partnering to repay a loan, a joint personal loan could be a good choice for you. A joint loan could help you present better credit, more assets and increased income to a lender to get better rates and terms on your loan.

What is a joint personal loan?

A joint loan is when two borrowers assume equal responsibility in repaying a loan. Each borrower will have their creditworthiness assessed, and each will sign the same loan documents. Because they have equal responsibility for the loan, they’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 borrowers would have an equal stake in the house.

Should I get a joint loan or have a cosigner?

Getting a joint loan is not the same as being a cosigner. When you get a cosigner for your loan, that person is essentially taking on responsibility for the loan without any ownership claim on whatever you purchase with the loan. When you have a joint loan, both you and the co-borrower will own the item for which you used the funds.

Pros of a joint personal loan

  • Present a higher income. Lenders will look at your income to make sure you can keep up with the monthly payments of a loan. If you combine your income with a co-borrower’s, it could make a lender more likely to loan you more.
  • Higher credit. If one borrower has much stronger credit than the other, this could help offset a borrower with weaker credit or no credit history.
  • Large down payment. Pooling more cash at the beginning of the loan could help you get more together for a down payment, which could decrease your monthly payments throughout the loan’s term.

Cons of a joint personal loan

  • You could break up. Whether it’s a business relationship or a romantic one, sometimes you end up parting ways with the people with whom you’re closest. If you do, you’ll have to decide how to split the debt, which could get messy.
  • One borrower’s poor credit score could impact the loan. Since the credit scores of both borrowers will be examined, if one borrower has a poor credit score or has had an adverse credit event, this could lead to higher interest rates or, potentially, could be a reason the loan application gets denied.
  • You’ll risk both credit scores. Since each borrower is equally responsible if you fall behind on loan payments, both credit scores are at risk of being adversely impacted.

Pros of a cosigner

  • No question of ownership. A cosigner can’t make any claims on whatever you purchase with the loan. If you get a mortgage with a cosigner, for example, the cosigner won’t own half your house.
  • Qualify for better rates. A cosigner with excellent credit could help a borrower with poor credit or a thin credit history qualify for a loan.
  • Help a borrower build their credit. Making consistent payments on a loan can help build credit over time. But if you can’t get a loan in the first place, this could be hard to achieve. A cosigner could help a borrower get a loan so they can begin building credit.

Cons of a cosigner

  • Puts the cosigner’s financial health at risk. A cosigner is responsible for the loan. If a borrower stops making payments, this could be bad for the cosigner’s finances or credit.
  • The cosigner might not be able to get other loans. Because this loan will appear in the cosigner’s credit history, they may have difficulty getting approved for loans they need, as lenders will look at their total debt and may not want the cosigner to overextend themselves.
  • Could be difficult to get out of. Getting released from a loan for which you’ve cosigned could be hard to do. If you’re cosigning for a loan, be prepared to commit for the long haul.

Where to find a joint personal loan

Looking for places to apply for a joint personal loan? Here are three options for joint loans you can compare.

LendingClub

LendingClub is a peer-to-peer lending company. Your loan could be financed by another person.

  • Rates: 6.95%–35.89% APR
  • Fees: Origination fee of 1.00% - 6.00%, late fee, check-processing fee
  • Documents needed: First, fill out an application; then, LendingClub might ask for additional documents to verify your income, identity and employment

LightStream

LightStream is an online division of SunTrust Bank. It offers home loans, auto loans or loans for a range of personal needs.

  • Rates: 4.99%–16.79%* APR
  • Fees: Rate is 0.50% higher if you don’t choose autopay
  • Documents needed: The application asks for information about your income and assets

OneMain Financial

You can start your application for a loan online before visiting a branch to complete the process.

  • Rates: 18.00%–35.99%** APR
  • Fees: No fees advertised
  • Documents needed: You’ll need to verify your employment and income at a branch

**Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66.

**Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

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