What do the terms “Co-Applicant” and “Co-Borrower” mean?

The individual who applies for the loan with you is known as a co-applicant or co-borrower. This option may be seen on house loan applications if the husband and wife apply for a combined loan. The similar option is currently available for personal loans from several banks and NBFCs.

Together with the principal applicant, a co-applicant is equally liable for loan repayment. The approval is determined by taking into account both applicants’ income and credit ratings. Both applicants will suffer a knock to their credit scores in the event of a default, and both will be accountable for the default.

Who is a Co-Applicant?

A co-applicant is a party who is able to co-sign on for the obligation of a Personal Loan. For many years now, getting a personal loan with a co-applicant has been especially common for house loans, with a spouse being the most popular option. Recently, it has become more common for couples to co-apply for personal loans with their spouse. This indicates that the eligibility of both applicants will be evaluated, as well as their combined eligibility for a personal loan.

Who can be a Co-Applicant?

Co-applicants for Personal Loans most frequently include spouses. To co-apply for a personal loan, though, you can include your parents, siblings, or kids.

What is the role of a Co-applicant?

A co-applicant is accountable for the Personal Loan repayment to the lender, to put it simply. The income level and credit rating of both applicants are taken into account during the application procedure to determine eligibility for personal loans. Similar to this, both partners’ credit scores will be affected if they fail on the personal loan, and the lender has the authority to take legal action against either party if it sees fit.

How would a Couple’s Co-Application help?

1. Increase in Income

In compared to filing a single loan application, it helps to increase the loan application’s overall income level, which might lead to you getting a bigger loan amount. Consider the scenario where the lender provides you a personal loan with a maximum of 25,000 Lakhs over five years and your monthly salary is 100,000 Lakhs. The lender will consider both applicants’ salaries if you add your spouse, who makes a comparable amount ($10,000 yearly), and may be able to provide a larger loan because the applicant’s total income has grown.

2. Credit Score

It’s crucial to realise that adding your spouse as a co-applicant on the loan application helps to further boost the credit score since the credit score is one of the primary factors determining whether a Personal Loan is accepted or denied. For instance, having a co-applicant with a good credit score may increase your chances of getting the loan approved if you have a low credit score for a variety of reasons.

3. Responsibility for Repayment

If you want to include your spouse as a co-applicant on the loan, this gives the lender some peace of mind because both applicants are jointly responsible for repayment. The weight of duty and repayment may always be shared. It will assist in dividing the tax advantage associated with the interest component as well.

What Benefits Can a Co-Applicant Offer?

There is still a chance for you to obtain the necessary loan amount if your low income or poor credit prevent you from receiving the desired personal loan amount. And you may accomplish this with the aid of your co-applicant, whose income raises the loan’s eligibility. Before disbursing the loan amount, the joint personal loan requests the income of both the primary and co-applicant.

The EMI load would be shared by both because it is a joint loan. Thus, you may simply repay the loan by dividing the EMIs.

Which Bank Provides a Joint Personal Loan?

BanksLoan AmountInterest Rates
SBI20 Lakh10.35%-14.75%
HDFC Bank15 Lakh10.75%-21.45%
Axis Bank15 Lakh12.00%-24.00%
Kotak Mahindra Bank20 Lakh10.99%-20.99%
ICICI Bank20 Lakh11.25%-18.49%
IndusInd Bank15 Lakh11.00%-16.00%
Punjab National Bank10 Lakh9.20%-12.05%
Canara Bank3 Lakh11.80%-13.85%
Bank of Baroda5-10 Lakh10.50%-15.50%

Are there any difficulties with submitting a Co-Application for a Personal Loan?

Leave a Reply

Your email address will not be published.