Guide to joint application personal loans
Borrowing with someone else can boost your chances of approval and increase how much you can borrow. However, it also means shared responsibility and shared risk.
- A joint application personal loan lets two people apply together and share responsibility for the repayments.
- In many cases, co-borrowers are jointly liable, meaning either person can be chased for the full debt if repayments aren't made.
- Both applicants must meet the lender's eligibility checks, including credit history, income, debts, and expenses.
If you and another person need to borrow money – whether it’s a partner, family member, mate, or someone you trust – a joint application personal loan could help you access funds sooner or qualify for a higher loan amount.
But before you apply and sign on the dotted line, it’s important to understand that both borrowers are on the hook if repayments fall behind.
What is a joint application personal loan?
A joint application personal loan refers to two people applying for a personal loan and being responsible for the repayments.
When applying for a joint application personal loan, each person is known as a co-borrower (or co-applicant). Provided you both meet the lender’s eligibility requirements, your co-borrower could be a partner, family member, or (with some lenders) a friend.
Each co-borrower will generally need to provide the same required documentation when applying for the loan, as well as any additional supporting documents the lender requests.
Read also: How to apply for a personal loan
What to consider before applying for a joint application personal loan
If you’re considering applying for a joint application personal loan, you should consider the following:
Equal responsibility
Both co-borrowers are responsible for the loan. In many cases, this is treated as joint and several liability, which means if one of you can’t (or won’t) meet repayments, the lender may pursue either borrower for the full amount, not just “their share”.
So while you might plan to split repayments between yourselves, the lender typically cares only that the repayment is made – and if it isn’t, both borrowers can be impacted.
Application criteria
Different lenders have different eligibility criteria for their loan products, but typically, you’ll need to:
- Be over 18 years old
- Meet requirements around income and employment status
- Be an Australian citizen or a permanent resident (some lenders may consider temporary visa holders)
- Meet the lender’s criteria for credit history, income, debts, and expenses
- Take note: Each co-borrower will need to meet the lender’s criteria. So if one of you doesn’t qualify, the application may be declined.
Personal relationship
It’s vitally important you consider the relationship you have with someone before going into debt with them.
- Do you know the person well enough to commit to a loan term that could last several years?
- Do you know if they’re good with money and have a stable income?
- Have they ever been bankrupt or struggled with debt in the past?
Even if the person is someone you’re close to, consider the strain the loan could put on your relationship if one of you falls behind on repayments.
Loan amount
A joint application personal loan may allow you to borrow a larger amount than if you were borrowing alone, because the lender may take both incomes into account.
However, this doesn’t mean you should automatically borrow the higher amount on offer. Make sure the repayments suit your budget and leave you with enough breathing room if circumstances change.
Why you might take out a joint application personal loan
Some of the reasons people may decide to take out a joint application personal loan include:
Increased chance of approval
In some cases, a lender may deny a personal loan to an individual but approve it if they apply with a co-borrower.
While both borrowers still need to meet the lender’s requirements, having two applicants can strengthen an application — particularly if one borrower has a larger income, a stronger credit history, or fewer existing debts.
To share an asset
When using a personal loan to buy a car for two people, a joint application personal loan can be a quick and easy way to split the cost and tie both parties to the purchase.
This can also apply to other big-ticket items like boats, motorcycles, computers, and furniture.
To share an expense
Joint application personal loans can be used to fund things often shared with another person, like a holiday, renovations, or a wedding.
You can also use a personal loan to pay for medical or education costs if you need another person to help out.
Debt consolidation
If you and another person have significant debts from things like credit cards, car loans, or other personal loans, a joint application personal loan can help you to consolidate these into one monthly repayment – potentially at a lower interest rate and with fewer fees.
- Take note: If you roll one person’s debts into a joint loan, both of you may become responsible for repaying them.
Increased loan amount
If you need to make a large purchase you can’t fund yourself, a joint application personal loan can help you to borrow a larger amount than you would be able to as an individual.
What’s the difference between a joint application personal loan and a guarantor loan?
A guarantor personal loan means another person (often a family member) agrees to cover the debt if you can no longer make repayments.
Depending on the lender and loan type, the guarantor may need to provide an asset (like a property) as security. Because of that additional safety net, lenders may be more likely to approve some borrowers with a guarantor.
Guarantor loans are different from joint application personal loans, because
- With a joint loan, two people take out the loan together, while
- With a guarantor loan, one person borrows, and the guarantor only steps in if required.
How to apply for a joint application personal loan
Each lender’s process will differ, but it typically looks like this:
1. Talk it through first
Discuss how much you want to borrow, what it’s for, and how you’ll handle repayments. Make sure both of you understand the commitment and how it could affect your relationship.
2. Compare loans
Compare multiple personal loans to find one that suits both your needs and has competitive rates and fees.
In the market for a personal loan? The table below features personal loans with some of the lowest interest rates on the market.
| Lender | Car Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Interest Type | Secured Type | Early Exit Fee | Ongoing Fee | Upfront Fee | Total Repayment | Early Repayment | Instant Approval | Online Application | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.24% p.a. | 6.95% p.a. | $389 | Variable | Unsecured | $0 | $10 | $495 | $23,334 | |||||||||||
5.95% p.a. | 5.95% p.a. | $386 | Fixed | Unsecured | $0 | $0 | $0 | $23,171 | |||||||||||
5.76% p.a. | 5.76% p.a. | $384 | Fixed | Unsecured | $0 | $0 | $275 | $23,066 |
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3. Apply with supporting documents
Submit the application forms and provide whatever documents the lender needs (ID, income, expenses, liabilities, and so on).
4. Wait for assessment
Approval can take anywhere from a few hours to a couple of weeks, depending on the lender and how complex the application is. If approved, read the terms and conditions carefully.
5. Accept the loan and receive the funds
Once you sign off on the agreement, the funds are usually deposited into the nominated account.
Pros and cons of joint application personal loans
Pros
- Higher chance of approval
- Potentially larger loan amounts
- Can help consolidate debts into one repayment
Cons
- Both borrowers need to meet the lender’s criteria
- If one borrower can’t make repayments, the other may be responsible for the full amount
- May put a strain on personal relationships
Savings.com.au’s two cents
Joint application personal loans can be a great way to share an expense or an asset, and they can make it easier to borrow more money.
But they do come with risks — which is why you need to know the other person’s financial history and genuinely believe they can handle the responsibility. Otherwise, borrowing money with another person can quickly see a relationship deteriorate.
If you’re unsure, consider speaking to a financial adviser or a free financial counsellor to help you weigh up your options.