Why Get a Personal Loan with a Co-Applicant?

Updated on: 14 Dec 2021 // 19 min read // Personal Loans
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Personal Loan happens to attract the attention of one and all, due to their ease of availability, and the fact that they are unsecured and do not require collateral. However, in order to compensate for the absence of collateral and reduce their risk propensity, Personal Loan providers in India primarily depend on the borrowers’ credit score.

A credit score of minimum 700 or above is considered ideal in this respect. If you have a rating lower than this, then your Personal Loan application may not get approved. Even if it does, the chances are that the conditions of the agreement are far from ideal and that the interest charged on these loans is incredibly high.

In the unfortunate situation of your credit score being less than perfect, a great way to Apply for Personal Loan online is to do so with a co-applicant. Here, the key is that the credit score of the co-applicant is in line with the requirement of the lender. However, getting a co-applicant can prove to be a daunting task, due to the following aspects:

  • You may have to fill out additional paperwork.
  • You will need to arrive at a consensus with the co-applicant regarding the payment of equated monthly instalments (EMIs).
  • You may have to search for a lender who allows co-signers.

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In spite of these initial hiccups, applying for a Personal Loan with a co-applicant can make your life much more straightforward. Not only can it enhance your chances of getting loan approval, but can also help you get the loan on favourable terms, and more importantly at lower Personal Loan interest rates.

At this point, it’s crucial to understand the difference between co-borrowing a loan, and co-signing one. In the case of the former, essentially two borrowers apply for the loan as equals, for purposes where the money is jointly required, such as that in the case of business partners, or life partners. This type of agreement is usually carried out, in order to show the combined income of the applicants, to qualify for a loan of higher value.

On the other hand, when it comes to co-signing the loan, the credit score of the co-signer is given precedence in taking a decision for the loan approval. In this case, the prerogative of repaying the loan lies only of the shoulders of the primary applicant, who seeks the help of the co-signer, in order to get better interest rates and improve the chances of approval of Personal Loan application online. In this case, the income of the co-signer is not considered when arriving on the decision for the ideal loan amount. Besides, only seldom is the co-signer given any access to the disbursed funds.

In both the cases, however, the credit ratings of the co-borrowers or co-signers get affected in case of delayed payments or defaults.

Now that you are aware of the differences between a co-borrower and a co-applicant let us take a quick look at the steps you ought to follow, in order to co-apply for a Personal Loan:

  • Find a trustworthy person, who is willing to be your co-applicant. This can be your spouse, parents, business associates or even friends.

  • Next, you would need to assure them of repaying the loan in the most efficient manner possible, without letting their credit score suffer due to delayed or defaulted payments. Besides, it is advisable for you to discuss all the aspects of the loan repayment with the co-signer, beforehand to avoid any confusion later.

  • You will then need to find an offering such as HDFC Bank Personal Loan which allows you to have a co-signer on board.

  • Once you have zeroed in on the lender, you can then apply for Personal Loan online. The application process may be a little different as compared to that when you apply individually. Your chosen lender will guide you regarding the same.

  • Once you submit the required documents and they are verified by the lender, it shouldn’t take more than 3 to 5 days for the loan amount to reflect in your bank account.

We hope that you now know all that there is to about Personal Loan apply online with co-applicants. So, wait no more before you can find an applicant that you trust, and apply for this critical credit right away. After all, your financial obligations shouldn’t have to wait for you to build the desirable credit score.

Also Read: 10 Tips for the Self-employed to Get the Best Personal Loan Offer

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 70+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.

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