The Pros and Cons Of Taking Out A Joint Personal Loan With A Partner or Family Member

Discover the pros and cons of taking out a joint personal loan with a partner or family member. Learn about the risks and benefits of co-borrowing for your financial goals.

1 May,2023 12:39 IST 3084
The Pros and Cons Of Taking Out A Joint Personal Loan With A Partner or Family Member

Personal loans have gained popularity among people to not just meet emergency expenses but also for big-ticket spending like weddings and vacations. Since lenders do not ask for any collateral, personal loans can also be opted by those that don't have any assets. Hence, the creditworthiness of the applicant becomes the important criteria for lenders to review loan applications. Borrower’s credit score is an important factor that determines the eligibility, the loan amount, interest rate, etc.

While those with good credit scores can possibly get higher loan amounts and can even bargain for a lower interest rate on personal loan, it is equally true in the reverse scenario. Applicants with lower credit scores may have to settle down for a lower amount and may also have to pay a higher interest rate. In such a scenario, joint personal loan with a partner or family members such as siblings would be a way out. Typically, applying with a co-applicant is popular in home loans. But not many people know that personal loans can also be taken jointly.

What Is A Co-Applicant?

A co-applicant is the second person with whom you can apply for a personal loan. Applicant’s partner or other family members such as parents and siblings can be the co-applicants. When the application is made, the person’s monthly income and credit score is added to yours. The co-applicant also shares the responsibility of repaying, which means that EMI will be paid by both.

Banks and lenders like IIFL Finance provide an online calculator for applicants to check how much will be the EMI amount and what could be the total interest payment. Along with this, borrowers must also understand some of the key factors while applying for a joint personal loan. One of the important factors is to choose a co-applicant with whom you have a good relationship and who can be trusted with money. Hence, it is important to choose a trustworthy co-applicant, who has a financial discipline.  


There are many advantages of joint personal loans. Some of them are as follows –

Loan Amount –

There are high chances of getting a bigger personal loan amount in case of joint application because the credit score of both the applicants is considered and the liability of repayment is also shared. This reduces risks and gives lenders comfort in disbursing higher loan amounts.

Better Terms –

Borrowers can negotiate for better terms and conditions and also on interest rate and other charges. Personal loans are unsecured in nature and hence, they carry higher interest rates. Credit score significantly influences the interest rate. In case of joint application, both credit scores are considered and that may allow them to bargain for better interest rates.

Shared Repayment –

The EMI will be shared equally by both the borrowers. Before making the application, it is a good idea to check how much is the monthly repayment amount to ensure that it matches the repayment ability of the borrowers. Lenders will also check for specific information on EMI deduction, the bank account for repayment, date of EMI, etc.
Zaroorat aapki. Personal Loan Humara
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While there are many benefits, there are some disadvantages also –

Longer Processing Time –

Personal loan can be availed in few days, if all the documents are in place. In fact, banks also offer pre-approved personal loans that can be availed within short period. However, in case of joint personal loan, the processing time for the application can be lengthy. There are two sets of documents that need to be checked and verified. Before making an application, both the borrowers must ensure that all the required documents like PAN card, Aadhaar card, bank statements, and income proof are in place.

Limited Options –

Usually, applications for personal loans are made after checking interest rates across various lenders. But that may not be possible in case of joint personal loans because very few lenders offer this product.

Credit Score –

A co-applicant with a higher credit score can help improve the eligibility for availing personal loan. But it is also true in the case of reverse. If the co-applicant’s credit score is low, it can lower the chances of the application getting approved.

Repayment Dispute –

The EMI payment is the joint responsibility of both the borrowers. But if there is any dispute over repayment and the EMI is missed, it could have a bearing on your credit score. Hence, it is important to select a co-applicant who has the financial discipline of making timely repayment of personal loan EMIs. It is also important to check beforehand if the co-applicant has any other debt obligation.


A joint personal loan can help you get a higher loan amount and also give you the power to bargain for better repayment terms, interest rate, and other charges. However, it is essential to run a check list of important documents. It is also important that both the parties are onboard with all the terms and conditions and committed to make timely repayment.

IIFL Finance provides a variety of loan products, including personal loans at an attractive interest rate. The application process at IIFL Finance is simple and can be completed online.

Zaroorat aapki. Personal Loan Humara
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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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