Getting a deal on a personal loan usually requires good credit and a decent income. If you have less-than-perfect credit, personal loans with a co-applicant are an option to secure financing.
Adding a personal loan co-applicant to the mix will complicate things a little. There are additional considerations, discussions to have and paperwork to fill out. And not every personal loan provider allows cosigners.
However, applying for a personal loan with a co-applicant is definitely possible, and in some cases, preferable. It can improve your chances of approval and even help you secure a better personal loan rate.
Here’s how to weigh your personal loan co-applicant options and make the best choice for your finances.
Options for personal loans with co-applicant
When getting a personal loan, it’s possible you can apply jointly for the loan with another person as a co-borrower or a co-signer.
In both cases, both co-applicants’ credit histories are considered to approve the loan. Both applicants’ future credit scores will be affected by the new loan’s repayment history.
But “co-signer” and “co-borrower” have some key differences. Make sure you understand the details of your personal loan with co-applicants to be sure it’s leading to the arrangement you want.
What is a co-borrower?
When two people apply for a personal loan together, they are viewed as co-borrowers. This is usually the case in personal loans used for joint ventures.
For instance, an engaged couple might want to be co-borrowers on a personal loan for a wedding. Spouses might want personal loans with co-applicants to consolidate their separate debts together. Business partners might want to be viewed as co-borrowers on a loan used to launch their venture.
Obviously, there are situations when it makes sense to have a joint borrower. Each applicant is considered equally in approving the loan, including each co-borrower’s income and credit history. The co-borrowers are also equally entitled to the funds from the personal loan, and are equally responsible for repayment.
Because both borrowers’ incomes are considered, this arrangement can boost your chances of approval higher than just a cosigner. It is also more likely to result in lower interest rates.
What is a co-signer?
A co-signer is different from a co-borrower, and serves a different purpose. A co-signer will improve your chances of qualifying for a personal loan; if your credit score isn’t good enough to qualify, your co-signer’s credit score and history are also considered.
Your personal loan co-signer will apply with your for the loan. Usually, only a co-signer’s credit information is considered, not their income.
Additionally, a co-signer has no rights to the funds borrowed through the loan. Those still go to the primary loan applicant, who also has the responsibility to make loan payments. The lender will only pursue a cosigner for loan repayment if the borrower defaults on the personal loan.
How to get personal loans with co-applicant
Find a willing co-applicant
The first thing you’ll need if you’re hoping to get personal loans with a co-applicant? Find someone who’s willing to be the second signature on the loan.
If you’re applying for a personal loan with a joint borrower, you probably already have someone in mind. It’ll be the person who is sharing and equally benefitting from the loan, such as your significant other, spouse, or business partner.
If you’re looking for a co-signer, you can also start with a significant other. But it’s also common for parents or other family members to agree to co-sign a personal loan.
When discussing the personal loan with your co-applicant, make sure you cover the financial responsibilities. Talk about making payments and what you’ll do if you’re ever in danger of missing a payment. Consider how the loan will affect each applicant’s credit.
Everyone will need to understand the arrangement and set expectations to minimize the potential for harm to the relationship.
Find personal loans that allow cosigners or co-borrowers
Once you have someone who’s agreed to be your co-applicant, you’ll need to find lenders who accept personal loans with co-applicants.
If you want to apply as co-borrowers, a credit union or traditional bank might be a good place to start. These institutions have wide range of personal loan products and options.
For borrowers who want a simple personal loan with a co-signer, many brick-and-mortar banks and online lenders accept personal loans with co-signers.
Apply for a personal loan together
The last thing is to choose a lender and submit your personal loan application. You’ll need to submit your information and your co-applicant’s.
The lender’s application process will walk you through how to add a second applicant, as well as prompt you to provide relevant documents or verification. Citizens Bank, for example, has co-applicants each complete applications and submit them before processing them.
Not sure where to start? Here are the top banks for those looking for a personal loan.
Interested in a personal loan?Here are the top personal loan lenders of 2019!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105.
†Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at reviews.lendingclub.com
**Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between January 1, 2018 to July 20,2018. The time it will take to fund your loan may vary.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000|
|6.26% – 14.87%1||$5,000 - $100,000|
|6.99% – 35.97%*||$1,000 - $50,000|
|5.99% – 24.99%2||$5,000 - $35,000|
|4.99% – 29.99%3||$10,000 - $35,000|
|5.99% – 18.99%4||$5,000 - $50,000|
|15.49% – 34.49%5||$2,000 - $25,000|
|6.95% – 35.89%6||$1,000 - $40,000|
|6.99% – 18.24%7||$5,000 - $75,000|
|9.95% – 35.99%8||$2,000 - $35,000|