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How to Secure A Personal Loan With A Co-Applicant

A co-applicant is different than a co-signer, and may help you secure a loan.

By - Dec 23rd, 2021 03:10 pm

Applying for a personal loan can be intimidating and terrifying, especially for first-time borrowers. After all, creditors and lenders don’t give out cash anyhow. Borrowers may need to prove that they can pay the monthly payments by having a high income and a good credit score.

Loan qualifying criteria vary between loan programs and lenders. So, it’d be best to shop around and compare offers. Consider adding a co-applicant to your loan application to make it simpler to qualify for a personal loan.

A co-applicant is someone who applies for a personal loan with you and is equally liable for repaying the loan.

What Is A Co-Applicant?

A co-applicant is a person who applies with you for a loan, helping you get better terms and rates. Don’t confuse co-applicants with co-signers, though. A co-signer is someone who adds their name to your loan application but isn’t obligated to repay the loan unless you default.

A co-signer may help you get favorable terms, but they’re not given access to the money or linked with collateral involved. Hence, a co-signer only acts as a secondary payment source in support of the primary applicant. And they can’t see loan details such as missed payments or amounts repaid over time.

On the other hand, a co-applicant or co-borrower shares in the loan transaction itself. For example, a co-applicant can use the money if you take out a personal loan, but a co-signer can’t.

When to Consider Getting A Co-Applicant?

Since co-borrowers have a financial obligation to pay off what’s borrowed, it only seems right to get a co-applicant who’ll benefit from the loan. Perhaps you and your partner are ready to deal with home renovations, so you may want to consider having them be your co-applicant.

Or, you can have your business partner be your co-applicant if you need more funding for your business. Having a co-borrower in these scenarios will also be beneficial, especially if you have a minimal credit history that makes it hard to get approved for an affordable interest rate.


It’s common for lenders to examine and scrutinize your credentials like debt-to-income ratio and credit history when applying for a personal loan. Through this process, lenders determine your loan term, interest rate and loan size.

Applying for a personal loan with a co-borrower with an excellent credit score can help you get favorable terms and a lower interest rate, particularly if you have a bad credit score. And since both of your incomes are being considered, it’ll help you get approved for a higher loan amount.

Plus, you might be deemed a less risky borrower if lenders know that two-income sources can be used to pay off the loan. Sharing liability for the loan can help cut down your chances of missing a monthly payment because another person is also responsible for making payments.


As with any partnership involving money, personal or business, a co-borrower relationship may turn unpleasant over time. Worse, the relationship might come to an end. So, if this happens, you’ll need to figure out how to divide the debt over the remaining term.

A joint personal loan can get complex when it comes to credit. If one of you has bad credit, it will result in higher interest rates. Plus, it’s possible a creditor may reject your joint loan application.

Also, note that if monthly payments are missed, it can hurt the credit scores of both borrowers involved in the loan.

How to Apply for a Joint Personal Loan

First, you’ll need to go to the lender’s official website to ensure that they allow co-applicants. Look for websites that are safe to transact, such as CreditNinja. And if they do allow it, know the interest rate you may get based on your personal information and credit scores.

Next, fill out the joint loan application. Make sure to review your offers thoroughly and agree to the terms that suit your needs. Once you’ve accepted a joint loan agreement, you and your co-applicant will sign it together.

Not only that, you’ll need to determine the bank account you’ll use for making regular monthly payments. Consider setting up automatic payments so that you’ll never miss a bill.

Bottom Line

Personal loans are an effective way to cover large expenses. Although the thought of repaying the loan in full can seem difficult, having a co-borrower will help you ease some of that burden. But take note that not all personal loans allow co-borrowers. With that said, double-check your application before submitting it.

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