What is a joint loan?

What is a joint loan?

author: Bryony Pearce

By Bryony Pearce

Joint loans come with a list of benefits, but there’s also a lot of added responsibility. So, we're taking a look at everything you need to know before taking out a joint loan.


A joint loan is a type of loan made for two or more people. Many people think that joint loans are only relevant to couples, but that’s not the case – couples, friends, business partners and family members can all apply and be accepted for a joint loan.

When a lender receives a joint loan application, they’ll look at all the normal things, like your credit history, employment status and income, but they’ll look at these details for everyone involved in the joint loan application.

This can either work for or against you. If you have a less-than-perfect credit history, applying for a joint loan with one or more people who have a good credit history could help you get a better deal and improve your chances of being accepted.

On the other hand, if you have a positive credit history but other parties on the application don’t, they could reduce your chances of being accepted, or compromise the loan and leave you with higher rate options.

How much can you borrow with a joint loan?

The amount you can borrow with a joint loan will depend on the type of loan you apply for. For example, with a secured joint loan, you can typically borrow a larger amount than you might be able to with an unsecured joint loan.

Because secured loans are secured against an asset – usually your home – at least one person on your application will need to be a homeowner.

As well as increasing your chances of being accepted for credit, joint loans can also increase the amount you can borrow. This is because you’ll have a higher collective income, the loan term will be longer and the lender will have more security that you’ll be able to meet your monthly repayments.

What happens if the other person can’t pay?

When it comes to joint loans, people often think that they’re only responsible for their proportion of the loan… but that’s just not the case.

By signing up for a joint loan, you’re actually agreeing to pay off the entire debt. This means that if, for whatever reason, the person you took out the loan with can’t (or won’t) stump up their repayments, you’re responsible for paying off their share as well as yours.

It’s therefore absolutely essential that everyone is confident they can keep up with their repayments before taking out a joint loan, and that you trust them to stick to their end of the bargain. Otherwise, you could end up with more debt than you can manage on your hands.

Can you get a joint loan with bad credit?

Absolutely. In fact, if the other person (or people) on the application has a good credit history, a joint loan could actually improve your chances of being accepted for credit – and secure a better deal in doing so, too.

On the flip side, if you have a history of bad credit and the person you’re applying with also has a history of bad credit, it doesn’t necessarily mean you won’t be accepted – it could just mean that the interest rate attached to your joint loan is likely to be higher.

Another thing worth remembering is that when you take out a joint loan, your credit file is linked to the other person’s. This means that future lenders will be able to see their credit history, as well as yours, if you apply for a different type of credit in the future. If they’ve got a good credit history this might not be an issue, but if they’ve got a poor credit history, it might impede your chances of getting accepted.

As with any type of lending, if you’ve struggled with credit in the past, ask yourself  – and honestly answer – if accessing further finance is the best option for you right now. And remember, if you take out a joint loan and you or others involved fail to meet the monthly repayments, you run the risk of damaging your credit history further.

Joint loans – things to think about

Before you commit to a joint loan, it’s essential that you’re ready to take the plunge with the other party (or parties) involved. Here are a few simple questions you should ask yourself before taking out a joint loan:

1)  Can you afford to keep up with your proportion of the repayments?

2)  Can the other party keep up with their share of the repayments?

3)  Do you trust the other party to stick to their repayments?

4)  If the other party stops making their payments, could you still afford to repay the entire loan?

5)  Is an individual loan a viable option?

For more information on the types of credit available to take out jointly and how joint loans work, head over to our ‘taking out a joint loan’ blog.

Disclaimer: All information and links are correct at the time of publishing.

author: Bryony Pearce

By Bryony Pearce

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