Personal Loans With a Co Applicant – Eligibility & Benefits

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Hey there! Today, let’s chat about something that might sound a bit daunting but is actually pretty nifty once you get the hang of it – personal loans with a co-applicant. Imagine you’re planning a road trip. You could go solo, but having a buddy along for the ride can make things smoother and more fun, right? That’s kinda like having a co-applicant for a loan.
So, let’s understand personal loans with co-applicants by first understanding personal loans.

What Are Personal Loans?

A personal loan is money you can borrow for just about anything you need. You might take one out to pay off other debts, fix up your house, or even fund a big wedding. Places like banks, credit unions, or online companies can give you these loans. You’ll need to pay back the money you borrow, usually with an extra cost called interest, over a set period.

Who Is a Co-Applicant in Personal Loan?

A co-applicant is like your road trip buddy. They sign up for the loan with you and agree to share the responsibility of paying it back. It’s like getting a two-for-one deal on credibility for your loan application. In simpler words, Should your initial loan application be denied, you have the option to reapply for a personal loan with another individual, referred to as a co-applicant. This joint application, also known as a Joint Personal Loan, can increase your chances of obtaining loan approval, particularly if your co-applicant has a strong financial background and credit rating.

Who Is a Guarantor?

A guarantor is someone who guarantees the loan will be paid back. Think of them as a backup singer, ready to step in if you hit a wrong note with your payments. Banks often ask for a guarantor before they say yes to giving out a personal loan. But remember, not all personal loans need a guarantor. When banks do ask for one, they usually want someone who earns a decent income, say above Rs. 24,000. A guarantor needs to know that if the loan isn’t paid back, they’ll have to step in and cover it. Their signature is part of the loan agreement, making this official.

Also, Read: Personal Loan for 8000 Salary : Step By Step Guide

Who Is a Co Signer?

A cosigner is similar to a guarantor but usually steps into the picture from the getgo. They cosign your loan, saying, “Hey, if they can’t pay, I will.” Basically, a cosigner is someone like a parent, relative, or buddy who helps you get a loan. They share their financial details, like how much they earn and their credit history. They promise to pay the loan for you if you can’t do it.

Difference Between Co Applicants, Co Signers, and Guarantors

When Might You Need Someone Else to Help with Your Personal Loan?

When you want a personal loan without offering any property or assets as a backup, you’ve got to meet the lender’s requirements. But if you don’t, the lender might ask for help from a guarantor. Here’s what the lender looks for:

1. Credit Score: This is a number up to 900 that shows how likely you are to pay back the loan. Closer to 900 is better. In India, you usually need at least 750 to get a loan on your own. If you’re below 650, you might need extra help from a co-applicant or guarantor.

2. Monthly Income: The lender looks at what you earn each month to make sure you can pay back the loan. You’ll need to earn enough not just for your regular expenses but also to pay back the loan. The lowest monthly income you need is usually Rs 22,000, but it could be more depending on where you live. If you don’t make enough, the lender will ask for a co-applicant or guarantor.

3. Credit Utilisation Ratio (CUR): This ratio compares the credit you’re using to the total credit you have. For example, if your credit card has a limit of Rs 60,000 and you usually spend Rs 30,000 of it, your Credit Utilisation Ratio (CUR) would be 1:2. This means you are using half of the credit available to you. Lenders prefer it when this number is lower because it suggests you manage your finances well and don’t rely too much on credit. If your CUR is high, meaning you’re using a lot of the credit available to you, the lender might ask for a co-applicant or guarantor when you apply for a loan.

What Happens if You Can’t Pay Your Loan Installments and You have a Co-Applicant?

Everybody likes a little backup when applying for a quick personal loan, right? It’s like having your spouse or family member giving you a hand. This extra support can make it much easier to get a big loan approved.

What a Co-Applicant Does:

A co-applicant is someone who joins you in applying for a loan from a bank or lender. They promise to help pay back the loan if you can’t. This can be someone who owns something with you, like your spouse or even your parents. It’s a good idea when you need a quick loan for big purchases or home improvements.

Also, Read: Personal loan For 15,000 Salary – Step By Step Guide

Paying the EMI (Equated Monthly Installment):

When you’re buying something pricey, like a house, you and your co-applicant are both in charge of paying back the loan monthly. It’s important because the loan approval and how quickly you get it depend on both of your credit histories. If you miss a payment, it can hurt both your credit scores because the loan is in both names.

4 Things to Think About Before Getting a Personal Loan with a Co-applicant

When you’re thinking about getting a personal loan with someone else, keep these things in mind:

1. Credit Scores: Both of you should have good credit scores, which show you’re likely to pay back the loan.

2. Income: The amount of money both of you make will influence how much you can borrow and your monthly payments. You’ll need a reliable income to make sure you can pay back the loan on time.

3. Debt-to-Income Ratio: This is the chunk of your income that goes to paying off debt each month. It’s best to keep this low so that you can comfortably afford the loan.

4. Repayment Strategy: Have a plan for how you’ll pay back the loan, including how much you’ll pay each month, how long it will take, and any extra fees.

3 Benefits of Personal Loans With Co-Applicant

Getting a loan with someone else can:

1. Boost How Much You Can Borrow: Together, you might be able to get a bigger loan.
2. Get You a Better Interest Rate: Loans might cost less interest if you apply with someone else because it seems less risky to lenders.
3. Improve Payment Terms: You might get more favorable terms for paying back the loan.

Eligibility Criteria for Personal Loans with Co-Applicant

To get a loan with someone else, you both need to:

• Be Old Enough: For a personal loan with a co-applicant, both applicants should be aged 21 to 58 years.
• Be Related: They should be a family member like a spouse, parent, or sibling.
• Make Enough Money: Their income, combined with yours, should cover the loan payments.
• Have a Good Credit Score: A good score could mean a higher chance of getting the loan and possibly better terms.

Papers You’ll Need to Apply for Personal Loans with Co-Applicant:

1. ID Proofs: Like Aadhar and PAN for identity checks.

2. Address Proofs: Things like utility bills.

3. Income Proofs: Recent pay slips and tax forms.

4. Photos: Passport-size pictures.

5. Bank Statements: To show your financial history.

How to Get a Loan with a Co-Applicant:

1. Start an Online Application: Fill in your details on the lender’s website.

2. Submit Your Documents: Provide your income and ID documents.

3. Wait for a Call: If you meet the requirements, a staff member will get in touch to finish the process.

4. Get the Money: Once everything is done, the money will be put into your account.

But Before You Suit Up:

Before taking the decision of co-applicant, consider asking these points to you co-applicant:

1. Open Communication: Discuss expectations, repayment plans, and potential risks openly and honestly with your co-applicant.

2. Choose Wisely: Pick someone with a stable income and good credit history who understands the commitment.

3. Consider Alternatives: Explore secured loans or lines of credit if a co-applicant isn’t the right fit.

While it’s not always necessary, getting a co-applicant for a personal loan can be beneficial, especially if you’re looking for better loan terms or need to improve your creditworthiness. It’s important to choose someone you trust and to discuss all the responsibilities and potential risks involved. Make sure both of you understand the commitment you’re making. With the right co-applicant and a solid financial plan, you can work together to meet your financial goals. Remember: Taking a loan with a co-applicant is a big decision. Choose wisely, communicate openly, and celebrate your financial victories together!

Thank you for reading! We hope this blog has helped you make informed decisions about co-applicants for personal loans.

Also, Read: Personal Loan for Rs. 14,000 Salary: Eligibility, Tips & Top Lenders

FAQs:

1. Can Someone Else Apply for A Personal Loan with Me?

Yes, another person can apply for a personal loan with you. This type of loan is known as a joint loan. When you and another person apply together, both your income and credit scores are considered.

2. Can Someone Else be on My Personal Loan with Me?

Yes, you can have someone else apply with you for a personal loan.

3. Should I Get A Loan with A Co-Applicant?

Getting a loan with another person might make it easier to approve and could lower your interest rate. You might also get more money than if you applied by yourself. This is a smart move if your credit isn’t great.

4. Will Having A loan with Someone Else Change My Credit Score?

Sharing a loan won’t change your credit score. But if the main person borrowing money doesn’t pay on time, it could hurt your credit score.

5. Can I Have Three Personal Loans At Once?

Yes!