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Sometimes, life is just so much easier when you have someone around to help you, even when it comes to taking out a loan. If you are not confident enough to borrow on your own, you can ask your partner or friend to get a loan together. Yes, there’s such a thing as a loan taken out by two people, and it’s called a joint loan.
Taking out Joint Loans
Joint loans are a type of credit made usually by two borrowers together, although some involve more than two. Both borrowers are equally responsible for repaying the loan, and they have an equal ownership interest in assets that are bought with the money borrowed. Taking out joint loans can increase the chances of being approved for a loan.
When you take out joint loans, you share the responsibility and the cost of making the repayments, and you can both spend the money you borrow. The loan application process is still the same as getting a loan on your own. The only difference is that both you and your co-borrower need to complete the application process together.
You need to provide both your personal and financial details, including your names, addresses, dates of birth, your employment details, each of your earnings per month, where you work, and your job titles.
The lender will run a credit check and look at both of your credit reports. All of the information you both provide will be the basis for the decision of your loan application. The rate the lender offers you also depends on the provided information especially on how high or low your credit scores are.
What’s great about joint loans is that you may be able to borrow more since the lender uses both your earnings to work out what you can afford to repay. Joint loans are common among couples. While joint loans offer many benefits, it is also a serious decision to take out one because each of you could be asked to repay the full debt if the other person cannot.
Many types of credit can be taken out jointly. They include secured loans such as mortgage, joint bank accounts that have an overdraft facility, and unsecured loans like personal loans. You can access joint loans from banks or any nonbank lending firms.
You might think that when you get a joint loan with another person, you’re only responsible for your half or share. However, that’s not the case. By signing the loan agreement with another person, each of you is agreeing to pay off the entire financial obligation if the other borrower can’t or won’t pay.
It doesn’t matter who spends the money, or who would own the item or items bought with the money from the joint loan or overdraft. For joint loans, it also doesn’t matter whether you and your co-borrower are married, in a civil partnership or even if you’re not in a relationship at all.
However, some lenders who would only approve joint loans to couples who are related to each other by blood or marriage. If you want to apply for joint loans, search a little more for an accommodating lender. Some lenders require each unrelated borrower to apply for a loan individually instead, which makes it harder to qualify for large loans.
Joint Loans for Bad Credit
If you are struggling with a low credit score, don’t be discouraged because there are still financial options available for you, and a joint loan is one of them.
While other lenders decline your loan application due to poor or bad credit history, many lenders who are willing to provide the finance you need on terms that will suit you. Bad credit joint loans can range from £1,000 to £15,000, depending on the lender you are working with. If you have a partner that is willing to take out a loan with you, you’ll find a number of lenders offer joint loans for couples with bad credit scores. Applying together, you are actually stronger together in your application than if you apply individually.
Both your incomes will be considered, and this will help you afford the loan. If your incomes are insufficient individually to qualify for a loan, your combined income could meet the requirements for the financial help you need. Both you and your partner will have to sign the credit contract together, which means that keeping up with repayments is both your responsibilities.
In case you’ll have missed payments, non-payment or default of the loan, both your credit records will be affected negatively. Sharing this responsibility is a crucial thing to consider in taking out joint loans. If your application is accepted, your loan could help you not only in your financial needs, but also help you build your credit scores.
Joint Loans in the UK
Joint loans are quite common in the United Kingdom. In the UK, joint loans can be granted to multiple individuals or even to organizations.
Two or more individuals may consider applying for joint loans for many different reasons like buy a property or car, getting married, getting a mortgage, or allowing a child or partner to become an authorized user on an existing credit card account.
Joint loans, however, can become an issue and concern in case of divorce proceedings. The terms in these cases may give one partner responsible for certain debts and the other partner responsibility for other debts. If you have a divorce agreement that says one person is responsible for repayment, then the loan will not be split. It is also possible that even after the divorce the former partners will still affect each other’s credit scores.
Getting a loan with another person is a big responsibility because almost all loans you get together with someone else are joint loans. Joint loans can be a great way to purchase something such as a car or house for instance that you would not be able to afford by yourself otherwise. Joint loans can also be a problem where you have to repay a loan when you did not get little or anything out of the money borrowed or when the other person is not paying his or her share.
Applying jointly for a loan can most likely increase your chances of being approved. However, it is difficult to apply together when one of you has a low credit score. Having a joint loan with another person means your credit record will be linked to his or hers. If you want to apply for a loan in the future, the lender would be able to see the other person’s credit history and consider those including your own. It is best for both of you to check your credit score first before applying for joint loans.
305.9% APR. £400 borrowed for 90 days.
Total amount repayable is £561.92 in 3 monthly instalments of £187.31.
Interest charged is £161.92, interest rate 161.9% (variable)
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