Personal Loans

Joint Personal Loans: What Are They and When Should You Get One?

Written by:

Kellie Amos


November 11, 2020

Last updated

August 12, 2022

Reading time

5 minutes

Kellie Amos

Kellie Amos is a contributing writer for Oiyo. She has a Bachelor of Business in Marketing and a Bachelor of Creative Industries in Creative & Professional Writing from the Queensland University of Technology. Kellie has previously produced content for a range of finance companies, entertainment publications, and fintechs.

Personal loans can be used for a variety of purposes, from holidays to medical bills. Although their eligibility criteria is usually a lot less stringent than say, home loans, submitting a joint application can increase your chances of approval. That said, taking on a shared debt isn’t something you should enter into lightly. Money can be tricky to navigate in relationships at the best of times! In this article, we’ll break down the basics of joint personal loans and when they could work for you.

What is a joint application personal loan?

A joint personal loan is a type of loan you can take out with another person, usually someone close to you – i.e. a spouse, partner, friend or sibling. This person is the co-borrower and will be jointly responsible for the debt. This means that if one of you is unable to meet the repayments the other will be liable for the payment.

Why take out a joint personal loan?

Having two people responsible for a single loan can be highly beneficial if one of you has poor credit history or cannot meet the loan requirements alone.

Aside from the obvious benefit of increasing your chances of approval, there are various other reasons why a joint application might seem ideal. For one, it could be a matter of just wanting to share an asset with a loved one. If you’re in a long-term, committed relationship, then sharing financial responsibilities can make things simpler and cheaper. For example, if you and your partner have large debts separately, you could save money by jointly applying for a debt consolidation loan and reducing your multiple repayments to one.

Joint personal loans may also be appealing if you’re looking to borrow a large amount. Naturally, the larger the amount the higher the risk to the lender. So, having two people responsible for the repayments will likely reduce their perceived risk. As a result, your chances of getting approved for a larger amount are generally much higher.

Important things to consider

Before you take the plunge and apply for a joint personal loan, it’s important to take a step back and look at the bigger picture. First things first, you’ll want to consider the financial situations you and your co-applicant are currently in. Money isn’t a topic most Aussies like to discuss, but the last thing you want is to end up with more debt than either of you can afford.

Remember, if you default on a personal loan, the damage to your credit score may be felt for years to come.

Ultimately, you’ve got to trust your co-applicant. So, you need to think about how reliable they are. Do they have a history of reckless spending or poor money management? If they’re your partner, do you think your relationship will last the life of the loan term? Do you have a contingency plan if you’re no longer together?

It can be difficult to answer these questions but they are a necessary evil. Understanding your respective finances will help you work out whether taking on a personal loan is truly an affordable option. And, perhaps more importantly, it may prevent you from uncovering any nasty surprises about your co-applicant later on.

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Key questions to ask:

  • What existing debts do you both have?
  • What credit score is needed to qualify for the loan?
  • Will the loan help you to build credit?
  • Does a joint application affect the interest rate?
  • How will a joint personal loan impact your debt-to-income ratio?

Pros & cons

To summarise what we’ve discussed so far, we’ve put together this table to give you a basic overview of the advantages and disadvantages that come with taking out a joint application personal loan.

Pros Cons
  • Increases your chances of approval
  • Eligible to borrow more
  • Shared responsibility
  • Consolidation of larger debts
  • Reliant on the other applicant
  • Liable for both repayments
  • The lender can pursue one person for legal action if it isn’t repaid

Bear in mind, this list is by no means exhaustive. Depending on your circumstances, there may be other factors worth considering before you apply for joint personal loans. You should always do your own research when working out if a financial product is right for you.

How do you apply for a joint personal loan?

Joint application personal loans usually follow the same processes as traditional personal loans. Generally, you and the person you’re applying with will apply online with a lender. This may be through just one application or in separate sections, it really depends on the lender.

Often, the lender will ask for both of your personal details, such as employment and financial information. Lenders will always outline their eligibility criteria and loan offering on their site. If you’re ever unsure about anything it’s best to contact the lender directly for more information.

Curious to know more?

Hopefully this article cleared up a few questions you may have had around joint personal loans. When it comes to personal loans, MoneySmart has a great loan calculator that can help you to work out repayments and how much you could feasibly borrow. We’ve also got a range of helpful guides on interest rates and comparing your options, so make sure you check out some of our latest articles!

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Oiyo is a consolidated online resource, we are not financial advisors. We work with a range of industry professionals and compliance check our articles to ensure factual accuracy. However, we do not provide professional financial advice. Consider seeking independent legal, financial, taxation or other advice to check how the information and ideas presented in this article relate to your unique circumstances.


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