Joint Loans
What is a joint loan?
A joint loan is a loan that’s taken out by two or more people. It may be a secured loan or a personal loan. Each borrower has access to the joint loan and is equally responsible for paying it back.
There can be benefits to getting a loan with someone else, such as potentially improving your chances of being accepted. But there are also risks, so you should think carefully before applying.
How do joint loans work?
It’s a common misunderstanding that you only need to look after your ‘half’ of a joint loan. This isn’t the case. Everyone who signs the joint loan agreement is responsible for the full amount.
It’s up to you to organise with the other borrower how to spend and pay back the loan. You may need to repay the full amount if the other person doesn’t pay, no matter who spent the money or who owns the things that were bought with it.
Remember, you should always make monthly loan repayments on time and in full. If you miss payments you run the risk of lowering your credit score, being charged late-payment fees and even getting into legal difficulties.
How does a joint loan affect my credit score?
When you apply for a joint credit with someone else and are accepted, your credit report will usually be linked to theirs. This is called a financial association and means that when lenders check either of your credit reports in the future, they can also look the other person’s report. Your credit score is only based on the financial information on your own credit report, so it will not be affected by any information recorded in the name of your financial associate. But the link means that each of your credit reports could affect credit applications the other person makes.
Am I more likely to get a joint loan?
Applying for a loan with someone else will affect your chances of being accepted. Whether it improves or lowers your chances may depend on several things, such as the other person’s:
Income
When you apply for a joint loan with someone else, the lender will consider your combined income – in other words, your income and the other person’s income added together. If you apply with someone who can easily afford the repayments, you may improve your chances of being accepted, borrowing a larger amount, and getting a low interest loan.
On the other hand, you may find it harder to get a joint loan with someone who’d struggle to meet the monthly payments.
Credit Score
Your chances of getting accepted for a loan can improve if you apply with someone who has a good credit score. If either one of you has a low credit score, that could have a negative impact on the joint loan application.
Remember, there are other ways to improve your chances of getting a loan. For example, you may be able to improve your credit score or get a guarantor loan. A guarantor is someone who agrees to pay your debt if you can’t. This means you can ask someone to support your loan application without giving them access to the loan. Just make sure that you and your guarantor understand the risks before you apply.
Can I get a joint loan with bad credit?
Some joint loans are designed for people who have a poor credit history. Loan providers need to manage the risk of lending to these people, so they’ll typically lend a smaller amount and charge a higher interest rate. But a ‘bad credit loan’ can be useful if you manage it responsibly.
Remember, if the other person has a lower income or credit score, you may get a better deal by applying for a loan by yourself.
Can I get a joint loan for debt consolidation?
A debt consolidation loan is used to combine multiple debts under one account. It may help you understand your debt better, simplify your repayments, and reduce the amount of interest you pay. You may be able to get a joint loan for debt consolidation, but it’s important to be aware of the risks.
Remember that each person who signs the loan agreement will be responsible for paying back the full amount. So if you take out a joint loan to help consolidate someone else’s debt (such as your partner’s), you’re taking on their existing debt. It doesn’t matter that it was their debt first – you’ll have to pay it back if they don’t.
If you’re the one who has debt to consolidate, remember it’s a big step for someone else to share your debt and it may put strain on the relationship.
Remember, debt consolidation isn’t for everyone. There are risks, such as the impact on your credit score and the temptation to rack up more debt.
Can I get a joint loan without being married?
You don’t have to be married or living together to get a joint loan. You can apply for a joint loan with pretty much anyone, such as a friend, relative or business partner. However, it’s important you trust them to manage the loan responsibly.
What happens to joint loans in a divorce?
Even after a divorce, you and your ex are equally responsible for any joint loans you took out together.
You may agree how to split up shared debts during the divorce process. But your loan provider doesn’t have to agree to these terms. As long as your name is on the joint loan agreement, the provider can hold you responsible for repaying the full amount.
You may want to consult a solicitor for advice on repaying joint loans as quickly and fairly as possible after a divorce.
How do I apply for a joint loan?
You can usually apply for a joint loan online or at one of the providers’ branches. Remember to bring all the relevant information and documents from each applicant, such as their full name, address, date of birth, income details and ID.
Make sure you compare loans before you apply. Comparing loans with Experian doesn’t cost a penny and it won’t affect your credit score. Plus, we’ll show you your chances of approval.
Just remember, we’re a credit broker, not a lender†. That means we don’t provide credit, but we can help you find offers from credit providers.
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