Since a personal loan is not inherently secure, i.e. it is not supported by collateral, lenders can support the decision to accept or reject based on your credit number and salary, both factors consider equality.
You know that the need for debt can arise at any time in life without allowing for the convenience of saving or planning. How can you handle such situations when you need to borrow money and suffer from bad credit or low income? The answer to this question would be to borrow from the applicant.
Who do we call a co-applicant?
A co-applicant is also a person who takes responsibility for a Standard Chartered Bank personal loan with you. Co-application is common when it comes to home loans, where spouses are the most popular combination of co-application. This feature is now being extended with personal loans by other banks and financial institutions.
Who can be a co-applicant?
Spouse, parents, or siblings can be your Loan Partner Loans. In the case of a home loan, only certain combinations such as a parent’s son, siblings, unmarried daughter/father/mother are allowed without a regular loan application from a partner. However, since a personal loan does not involve a joint venture or a guaranteed business (House, Gold, Car, etc.), other combinations may also be allowed to apply jointly. This will also depend on the rules, regulations, and procedures of your bank / financial institution.
How Can a Co-Application Help?
In the case of a joint application, the income of both applicants is covered by a single loan, this makes you fall under personal loan eligibility for a larger loan that may meet your needs. Or it may make you eligible for a loan that you may find difficult to accept on a single income. The same is true with your credit score. If you have low credit scores, then an applicant with good credit scores can help you with your loan approval as an integrated score can help you. Besides, the loan repayment remains with both applicants, so you can effectively split the payment obligation so that one person is not taxed for the entire EMI fee.
What Are the Challenges Involved in Finding a Co-Applicant for your loan?
Finding a co-applicant: Not everyone can be lucky enough to find a co-applicant who earns and has a good credit score. Your parents may be ready to apply, but if they are retired or have no (good) credit score, the whole purpose of having them as an applicant can be defeated.
Additional Documents: In the event of joint use of personal loans, the documentation requirements will include the same set of documents from both applicants who are responsible for preparing the required documents.
Loan Payment Agreement: The applicant is also equally responsible for the immediate repayment of the loan and their credit points are at risk if anything goes wrong from the end of the applicant. If the applicant also does not want to participate in the repayment of the loan and has no say in the use of the loan, it may be your sole responsibility to cancel the loan. In situations like these, it may be difficult to reach an agreement.
Process May Be Delayed: Personal loans are known to be issued immediately. However, when 2 applicants are involved, the consideration of additional documents may delay the loan process.
Not All Banks / Financial Institutions Provide Joint Loans: Not all banks or financial institutions offer individual loans collectively. If you have a good relationship with your bank, you can ask them to allow you to apply for a personal loan in a shared mode.