Can I apply for a joint loan online?

You can apply for a joint unsecured loan online through a variety of lenders. If you apply for a secured loan, you’ll most likely need to speak to an adviser over the phone to complete your application.

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How do joint loans work? 

Joint loans can be taken out by two or more people. Each borrower is responsible for paying the loan back in its entirety, even if they agree between themselves to contribute a share of the monthly payments.

Being jointly liable for the loan means you may need to increase your payments if one of you falls behind, as you have a shared responsibility to pay it back on time and in full.

The lender can chase each borrower for payment. Regardless of whether you’ve paid your ‘share’ on time, your credit score could be affected if you collectively fall behind with payments.

Is it better to apply for a loan individually or jointly? 

Whether it’s better to make a single or joint loan application depends on your personal financial circumstances.

For example, if you have a good credit history but the person you’re applying with has a bad credit history, you may be offered a better rate on your own. But if you have a bad credit history, adding someone else to the loan could boost your chances.

This is because having joint finances can increase or decrease your creditworthiness in the eyes of lenders, depending on the level of risk involved.

There are several pros and cons you should think about before applying, as shown below.

Pros of making a joint application  

  • Managing the repayments might be easier - loan repayments can be expensive, and you may find them easier to manage collectively than on your own
  • You could borrow a larger sum of money – lenders will take total income and expenditure into account when assessing your affordability
  • Your chances of approval may increase –  if the other borrower(s) has a better credit score than you, you might have more chance of getting approved than if you applied on your own
  • You may get offered a better deal - applying with somebody who has a good credit score could make you eligible for lower interest rates too

Cons of making a joint application  

  • You might struggle to get a good deal - if the other borrower(s) has a lower credit score than you, it could be harder for you to get the best interest rates or be approved in the first place
  • There’s less choice – there are fewer joint loans available compared to individual loans, so you don’t have as many options
  • You are jointly liable for paying back the full loan amount on time - if the other borrower(s) stops making payments for whatever reason, you are equally responsible for making up the difference
  • Your credit reports become linked - this could be detrimental to your credit score if the other borrower(s) stops making payments on time or at all, especially if you can’t afford to pay the full amount

How to make a joint loan application 

Once you’ve done your research on joint loans and checked your eligibility using an eligibility checker, it’s time to apply. Make sure you’ve also looked at the total cost of the loan, including interest rates and fees, so you can find the best deal for your circumstances.

Follow these five steps below for a smooth joint loan application process.

1. Gather all your personal information together 

Joint loan applicants will need this information:

  • bank details, potentially for all open accounts
  • current address and previous addresses, covering the last three years
  • employment details for any current employers
  • personal information, such as your date of birth

2. Make a joint application 

Complete the joint loan application process online by filling out all the required information. This will involve a hard search of each applicant’s credit report, which may cause your credit score to dip temporarily.

Don’t worry too much about this, as your credit score should go up as the loan payments are made on time and in full. Waiting around three months between credit applications can also help.

3. Receive a decision from the lender 

Each lender has their own process. Some will approve or reject your application instantly or on the same day, while others may need a little more time to reach a decision – sometimes several weeks.

4. Sign and return the agreement if approved 

If you’re happy with the terms of the loan agreement, sign and return it to the lender. Make sure you read all the information carefully before signing it, because it’s a legally binding contract.

5. Wait for the funds to be transferred over 

Once you’ve returned the credit agreement, wait for the funds to be transferred to your nominated account. This may happen on the day of approval, or may take a few business days or weeks – it’s different for each lender.

Typically, these timeframes are shorter for personal loans, and longer for secured loans due to the further information required. The lender should be able to give you an idea of how long it will take, so you know when to check your bank account.

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Intelligent Lending Ltd is credit broker, working with a panel of lenders. Homeowner loans are secured against your home.

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