What is a joint loan?

A joint loan is a form of credit that you take out with at least one other person. You may be able to borrow more than you could individually. However, all borrowers are liable for the full amount, not an individual share.

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What types of loans can be taken out jointly?

A joint loan application can be made for most types of loans, including:

  • Unsecured loans – (such as personal loans) aren’t secured against an asset
  • Secured loans – use an asset (such as your home) as collateral
  • Debt consolidation loans – used to combine your debts into one payment
  • Loans for bad credit – can help those with poor credit rebuild their credit history if they always pay on time
  • Home improvement loans – used to fund the renovation or redecoration of a home
  • Car loans – can be unsecured or secured to provide finance for a car

With the exception of debt consolidation loans, lenders don’t tend to stipulate what you can and cannot spend the money on. However, it’s worth thinking about whether you need the money for something important before you borrow. All parties will need to commit to paying it back.

Can I get a joint loan? 

Whether you can get a joint loan depends on:

  • your individual circumstances
  • the other applicants’ circumstances
  • the lender’s eligibility criteria (which vary from one company to the next)

All applicants will need to pass certain checks carried out by the lender (such as credit checks and affordability checks). This is because you are all equally and fully liable for the payment of the entire loan, no matter who spends the money. This is known as ‘joint and several liability'.

How much can you borrow with a joint loan? 

How much you can borrow with a joint loan depends on:

  • the borrowers’ personal circumstances
  • the lender’s criteria
  • the type of loan you want to take out

You may find it easier to borrow more money by sharing the responsibility and getting a joint loan, as the lender will take total income and expenditure into account. But it is sensible to take out only what you as an individual can afford to pay back.

Secured loans

You could borrow more at a lower rate with a secured loan than a personal loan. But as it would be secured against an asset like your home, your property could be at risk if you don’t keep up payments. You may also end up paying more interest overall. 

Unsecured loans

Personal loans tend to come with lower limits, higher interest rates, and shorter payment periods than secured loans. Falling behind with payments could affect your credit score and ability to get finance in the future.

It’s important that the loan is affordable for you, both now and in the future. Circumstances can change, so you need to factor this in when looking for a loan.

Can you get joint loans for bad credit? 

Joint loans for bad credit are available from a wide range of lenders, but you may find your options are limited – and higher interest rates may apply.

Tip: Use an eligibility checker before you apply to see whether you’re likely to get accepted, as checking won’t affect your credit score.

How does a joint loan affect my credit score? 

If payments are made on time and in full each month, the effect on your credit score should be positive. Missed or late payments, however, would have a negative effect.

Always think carefully before taking out a joint loan, as this creates a financial association between the borrowers. If one person has a bad credit history, this could affect the other borrowers’ ability to obtain credit. 

Can you split a joint loan? 

No, you can’t split a joint loan, even if one person can’t or won’t pay, or if you took it out as a couple but have since split up. This is because when you took out the loan, you both signed a credit agreement, which is a legally binding contract.

Note that there may be some extraneous circumstances where you can split the loan (such as if you took it out under duress), but you would need evidence to prove this.

Things to remember about joint loans

Before you commit to a joint loan, give these questions some careful thought:

  • Would an individual loan or credit card be a better option for you?
  • Can you afford to keep up with the payments now and in the future?
  • Do you trust the other borrower(s) to keep up their payments?
  • Are you able and willing to cover the full payment costs if needed?
  • Are you happy to create a financial association with the other borrower(s)?
  • Are there any fees or charges you need to be aware of?

Always be prepared and able to cover the full cost of a joint loan should circumstances not go to plan. 

Remember, it’s essential that everyone is confident they can keep up their payments before taking out a joint loan. Otherwise, you could end up with more debt than you can manage on your own.

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