Your Joint Personal Loan Planning is Going To Change After This: Expert’s Take and Tips

This article will help you understand the joint personal loan as a concept. Let us also share with you the tips and tricks to implement to bring an effective amalgamation of the joint loan planning.

In the last year, every person in the US had an average personal loan debt of $11,652 on their shoulders. Imagine if they had a joint personal loan. The debt would come down to $5,826 in a moment. How? Keep reading.

Introduction to Joint Personal Loans

Who doesn’t want an easy lifestyle and the best for them and their family? However, the US Dept of Health and Human Services highlights that 36.8 million people are below the poverty line in the country.

We often can’t fathom a state’s poverty with naked eyes. However, thousands of people are meeting their quintessential needs barely. For them, the best solution is a joint personal loan. Why? And how to apply for and get a joint personal loan?

What is a Joint Personal Loan?

What do you think? It is a loan where two or more people are jointly liable for the payback. However, it differs from a personal loan, where you have another co-signor. Instead, a joint personal loan divides the loan capital equally or proportionately between the applicants.

Let’s imagine a scenario. You must take a [personal loan for your academic or business. Here, your parents, friends, or acquaintances may act as co-signors. They won’t share the loan capital. However, they act as a co-signor to help you get the loan easily.

However, a joint personal loan is shared between two or more people. Let’s say you need a loan of $5 million to start a new business. However, you are individually eligible for $2 million only.

Now, consider getting another partner or a friend onboard the venture. As a result, the joint personal loan eligibility becomes more than $5 million. That’s how joint personal loans work. This is only one scenario of a joint personal loan. There are many more.

Definition and Overview of Joint Loans

A joint personal loan has two partners (applicants) generally. The first is the primary borrower. The other is a co-applicant. Here, both individuals enjoy the loan share and the liability to repay.

Key Differences Between Individual and Joint Loans

With personal loans, a lot of unique equations are onboard. For example, these loans are unsecure. The liability on the part of the bank is more. Hence, there is a greater interest rate applicable. In the case of joint personal loans, two people’s credit scores are considered.

Hence the safety cushion with the bank is more here. As a result, the interest rate for a joint personal loan may be lesser than the individual loan. For example, the APR of U.S Bank for personal loans varies from 8.74% to 24.99%.

If both of your credit scores are fair to good, you may be eligible for the lowest APR, i.e., 8.7%.

Scenarios Where Joint Loans Are Ideal

• You and your spouse are planning a business together
• Two friends coming together for a joint venture
• You and one of your parents take a joint personal loan at a rate lower than a student loan.

Eligibility Criteria for Joint Personal Loans

Let’s discuss the main criteria you must meet if you want to apply for a joint personal loan in the US:

Who Can Apply for a Joint Loan?

Firstly, you have to have US citizenship proof. That may be an address or birth proof. You may lso produce a permanent residentship proof. Either of the two works.

Eligibility for Co-Borrowers (Spouses, Family, or Business Partners)

Firstly, both people making a personal loan joint application must have a stable job in the public sector or listed private sector firms or have legal self-employment, generating reasonable income. Again, both applicants have to be more than 21 and less than 60 years old.

Individual Requirements for Primary and Secondary Applicants

Firstly, the primary borrower should not have any ongoing monthly loan higher than 10% of their disposable income. However, the co-applicant can have an existing loan liability of more than 10% but less than 15%. Some banks allow up to 20%.

However, both applicants should have a credit score of 750. If the primary applicant has a low credit score, the other must have an exceptional (more than 750) credit score.

Financial and Employment Criteria

As I mentioned, you must have reasonable income sources. Vide details above. However, that’s not the only thing here. Both the applicants must submit details of their employment status and hence submit pay stubs. At the same time, they must disclose phone numbers and names of employers.

Lastly, the monthly income amounts for the last 6 months should also be mentioned.

Minimum Income Requirements

The borrower’s average requirement for a joint personal loan is $100,000 per year. However, the maximum DTI should be 40%. Meanwhile, some banks may ask you to reveal your credit history for the last 3 years from at least two accounts (if you have two accounts).

The same applies to both applicants, barring the last one.

Employment Type and Stability

Here are some prime clauses you can’t ignore. You must have stable employment as a primary applicant. In addition, there should be clean pay stubs for the last 12 months.

Credit Score Requirements

You may have a great job and even better asset strength. However, your credit score matters more than anything here.

How Credit Scores Impact Approval

Let’s go back to the example of the U.S. Bank that we started with. It is the best joint personal loan-offering bank in the country.

If your credit score and co-applicants) is more than 780, you would surely be eligible for a low APR. It might be less than 9%.

However, things change when the credit score is equal to or less than 650. It means your APR (interest percentage) would be at least 13% to 14%. Now, this equation might vary from one bank to another.

But the proportion remains the same. So, it is apparent that a personal loan is easier to get during joint application. But you need a good credit score.

Combining Credit Scores of Both Borrowers

Remember that the credit score requirement is not a mandate for any of the two applicants. It equally applies to both of them. Meanwhile, it is also crucial that the credit score of the second or the co-applicant is considerably higher if the primary borrower has a score less than 750.

How To Calculate the EMI for a Joint Personal Loan

You can use a simple formula to calculate the EMI you’ll pay monthly for your joint personal loan.

EMI = P × R × (1 + R)N / (1 + R)N – 1

Here, P is the principal loan amount or the capital that would be transferred to your account once the loan is approved. R is the interest rate applicable here. N refers to the tenure of payback.

Benefits of Taking a Joint Personal Loan

You must apply for a joint personal loan if your credit score is faring well, and you have a reasonable job with fair assets. You will be eligible for the highest disbursable limit when these criteria match.

But loans are also taken to manage dire financial situations; there’s no taking that back. If you think the same too, here are some of the benefits you can expect from a joint personal loan:

• Higher Loan Eligibility and Amount
• How Dual Income Increases Loan Limits
• Examples of Enhanced Borrowing Capacity
• Shared Responsibility for Repayment
• Dividing Loan Repayment Between Co-Borrowers
• Potential for Lower Interest Rates

How Combined Profiles Reduce Risk for Lenders

It’s simple. Let’s say you have a credit score of 688. And your co-applicant 820, for that matter. Indeed, a primary applicant with a score below 700 won’t be eligible for the highest limits at the lowest rates. But when you average the two scores, it comes to >750.

That’s the crux to crack the code of banks and get higher credit through joint personal loans.

Challenges of Joint Personal Loans

Don’t have ideas like a joint personal loan is all gain nd no loss. Well, there are no losses technically. But there are some risks, and you need to be well aware of these. Otherwise, you may have to pay a higher interest, or your monthly repayment value could unnecessarily shoot up.

If you want to avoid such consequences, be wary of these challenges of a joint personal loan:

• Shared Liability, which means you have to bar the whole liability if the other person bails out for some reason or the other
• Implications of Default on Both Borrowers are equally applicable. Your credit scores go down if your partner does not pay his share.
• Impact on Relationships can be the inevitable outcome of issues regarding loan capital and liability sharing.
• Financial Strain in Case of Disagreements
• Getting same day personal loans are tough, if you want a joint one

How to Apply for a Joint Personal Loan

How to get your joint personal loan from X, Y or Z bank. I keep getting questions like these every other day. So, let me tell you that the process is the same for all banks and credit unions. So, read the steps tightly.

• Choose the Right Lender
• Compare Lenders for Joint Loan Options (easier for digital personal loan)
• Gather Required Documentation
• Submit Identity Proof for Both Applicants
• Also submit your Income and Employment Proof
• Finally, submit the Loan Application
• Completing the Application Form is another grave responsibility
• Now, the bank will verify the Eligibility with the Lender
• The final game is Loan Approval and Disbursement

Timeline for Approval and Fund Transfer

The approval process may take as much as two to three working days. After that, you will receive the funds in your account withing seven working days from that date when your approval and limit eligibility come to you by email or notification.

If you are in a hurry, you may check out Credible personal loan. It is a platform where the best personal loan vendors list their offers.

FAQs About Joint Personal Loans

In the US, only 23% of the people have a credit score of 800 or above. They may quickly get a personal loan without income proof.  But, 15.5% of the population has credit scores as poor as 550 or below. So, a joint personal loan is viable if your credit score is inadequate for the reasonable loan amount you need.

On that note, I am answering the questions that people asking frequently about joint personal loans:

Conclusion

A joint personal loan is viable if your monetary needs are touching the skies. Or your current income is not sufficient to meet the contingent needs.

But remember that a joint personal loan means shared responsibility. Understand the clauses of payback and loan sharing. Then apply.

Try to apply with the frontline banks. Meanwhile, there are credit unions like SoFi that offer low eligibility criteria. However, they charge higher interest (APR). So, they shouldn’t be your preference.