12 MAY, 2022

Your personal loan eligibility is based on your age, income, job profile, city of residence, credit score, etc. Depending on your eligibility, the lender reviews your application and determines the interest rate and loan amount. To avail a personal loan, it is crucial to meet the eligibility criteria of the lender. If you fail to do so, the lender can offer higher interest rates or reject your loan application. However, what if you are unable to meet the lender's eligibility? Does that mean you cannot avail a personal loan? Certainly not. One of the many ways suggested to enhance your eligibility is availing a joint home loan.

Let's see if availing a joint loan can actually help improve your eligibility.


What is a joint personal loan?

When you avail a personal loan with a co-borrower, it is called a joint personal loan. The individual with whom you avail the joint personal loan shares the responsibility of repaying the loan with you. A joint personal loan helps avail the loan at better terms and share the debt burden. 


With whom can you take a joint personal loan?

You can take a personal loan with your earning spouse, siblings, or parents. Some lenders may allow other family members to be your co-applicant too. However, as the lenders consider the eligibility of all the co-borrowers combined for the loan, you must choose the co-borrower carefully. Your co-borrower should have a high monthly income and a good credit score. Moreover, if they default, it can impact your future chances of taking loans as well. Therefore, ensure to check their repayment capacity and creditworthiness.  


How can co-borrowers help you avail better personal loans?

Your eligibility is dependent on various factors. However, your income and credit score are the two crucial eligibility factors that often impact your loan amount and interest rates. If your co-borrower has a high credit score, it can boost your eligibility and help you get the loan approval faster and easily. Similarly, even if your income is low, the combined income of all the co-borrowers can enhance the eligibility. The increased income level can help you get more competitive interest rates and also higher loan amounts. Therefore, availing a joint personal loan can help you get a hassle-free loan with speedy disbursal. You could also get pre-approved offers. However, if the credit score of your co-borrower is less, it can put a dent in your eligibility and reduce the chances of availing a personal loan.


While you can enhance your personal loan eligibility and get a better loan with a co-borrower, you must know about its repercussions too. The co-borrowers are equally responsible for loan repayment. So, if they do not pay their EMI on time or worse, miss the deadline completely, it could adversely impact your credit profile. Therefore, if you wish to get a joint personal loan to enhance your eligibility, ensure that the co-borrower you decide on helps and not harms your loan application.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.