What Are the Eligibility Criteria for Joint Personal Loans?

Need a larger loan amount or need a way to enhance your approval chances? A joint personal loan is probably what you need. Using a co-borrower to apply for the loan, eligible borrowers will have an opportunity to benefit from the enhanced loan eligibility and greater borrowing limits based on the lender's discretion.

To know how a joint personal loan works in India will assist you to make your financial decisions better.

What Is a Joint Personal Loan?

The term joint personal loan refers to a loan that is applied for jointly by two people and wherein both of them have equal accountability for the repayment of the loan, as well as the fact that lenders will evaluate the combined income, repayment capacity, and creditworthiness of both applicants before the loan gets approved.

Who Can Apply for a Joint Personal Loan?

Eligibility differs among lenders; however, joint personal loans are usually available for:

• Husband and wife

• Parents and children

• Brothers and sisters (provided that the lending company allows this)

• Other relatives approved by the lender

Both borrowers should meet the lender’s criteria, including age, income, employment, and credit history.

With the help of PrimeScore, one can keep an eye on his credit status with all the four major credit agencies in India, which enables him to spot any inaccuracies in his credit history

Benefits of a Joint Personal Loan

1. Higher Borrowing Eligibility

The main benefit of applying for a joint personal loan is the fact that the combined earnings of both applicants may be considered by lenders.

2. Better Prospects of Getting the Loan Approved

The financial stability and good credit history of a co-applicant with stable earnings may positively affect the entire application process in case the primary applicant has no sufficient credit history.

3. Joint Financial Obligation

Both parties in a joint personal loan application may have their say when it comes to EMIs.

4. Better Borrowing Terms

If you both have good earnings and a good credit history, your borrowing eligibility may significantly increase.

Eligibility Criteria for a Joint Personal Loan

Although every lender has different requirements, common factors include:

• Indian residency

• Eligible age as specified by the lender

• Stable source of income

• Good repayment capacity

• Healthy credit score and credit history

• Required KYC and income documents 

Remember that meeting the minimum eligibility criteria does not guarantee loan approval. The final decision depends on the lender's internal credit assessment.

Points to Consider Prior to Application

Some important things you should know before opting for a joint personal loan include the following:

• Both the applicants have an equal responsibility towards the repayment of the loan.

• Failure to make an EMI payment or any default on loan will affect the credit score of both the borrowers.

• Only apply for an amount that is easy to repay for both the applicants.

Smart borrowing saves money and credit score.

Why Your Credit Profile Is Still Important

Even if you apply either alone or jointly, the credit history, repayment behavior, outstanding loans, and Credit Utilisation Ratio will still be checked by the lenders.

Having a good credit profile helps in:

• Approval of the loan.

• Interest rates.

• Eligibility for the loan amount.

• The whole experience of borrowing money.

Checking your credit profile before applying will reveal any problems.

Final Thoughts

A joint personal loan may prove to be a good way of financing if one requires a larger loan amount or needs to enhance his loan application. It should, however, be noted that since both individuals have equal responsibilities, it is important that one borrows sensibly and repays the loan promptly. It would be helpful if one examines his credit profile beforehand. 

FAQs

What is a joint personal loan?

It is a loan which two eligible applicants take as a group, where the applicants share the responsibility of paying off the loan equally.

Who can apply for a joint personal loan in India?

The eligibility will depend upon the lender, but in most cases, you can find that spouses, parents and children, siblings, or other eligible members from a family can be joint applicants.

Does the co-borrower's credit score play any role in taking a joint personal loan?

Yes, in most cases, it plays an important role in the loan decision process by the lenders.

Would a joint personal loan impact the credit scores of both borrowers?

Yes, the credit scores of both borrowers would be affected due to their joint responsibility of repayment.