Joint Personal Loan Eligibility: All You Need to Know

Every person hopes for an easy lifestyle and wants to give the best of everything to their family members. However, if the needs do not match the person's current financial situation, getting a personal loan and repaying it over time seems like a viable option to cover specific financial expenses. These days, applying for and getting a personal loan is straightforward since providing collateral against it is unnecessary. Submitting minimum documents like basic personal details and proof of income is enough to get a loan sanctioned.

But what happens when a personal loan application gets rejected? It can be quite disheartening, especially if the rejection is due to a low credit score or insufficient income. One way to overcome this hurdle is by opting for a joint personal loan. Let's dive into what a joint personal loan is, who can be a co-applicant and the eligibility criteria.

What is a Joint Personal Loan?

A joint personal loan involves two applicants—the primary borrower and a co-applicant. That means both individuals share the responsibility of repaying the loan. A joint loan can be beneficial, especially if the primary applicant's credit score or income isn't sufficient to secure a loan independently.

Who Can Be a Co-Applicant?

A co-applicant is an individual with whom the borrower applies for a loan jointly. The co-applicant shares the responsibility of loan repayment with the main borrower. These loans are, in other words, also called joint loans. When a borrower applies for a joint personal loan, the credit score, the income of the co-applicant, and the joint personal loan eligibility of both applicants are factored in. Regarding a personal loan, parents, spouses, or siblings may be the co-applicants.

Check Eligibility Online: Personal Loan Eligibility Calculator

However, it's not just limited to family members. Business partners and friends can also be co-applicants if the goal is to increase the chances of loan approval or to qualify for a higher loan amount.

Joint Personal Loan Eligibility

Basic Criteria for Joint Personal Loan:

• Citizenship: Applicants have to be Indian citizens.
• Employment: Applicants should be employed in a public or private limited company or an MNC.
• Age: The applicants should be between 21 and 60 years old.
• Credit Score: Applicants should have a credit score of more than 750.
• Work Experience: Applicants should be graduates with at least 1 year of work experience.
• Income: Should have a minimum income of Rs. 25,000 per month.

Application Process for A Joint Personal Loan

Applying for a joint personal loan is a straightforward process. Here's a step-by-step guide:

1. Filling the Application Form: Both applicants need to fill out the joint loan application form with their respective details.

2. Document Submission: Both applicants need to submit a few documents, including:

• Aadhaar cards
• PAN cards
• Salary slips or income proof for the last three months
• Bank statements for the last six months

3. Verification: The lender will verify the documents and check the credit scores of both applicants.

4. Approval and Disbursement: Once verified, the loan gets approved, and the amount is credited to the borrower's bank account.

Key Factors to Consider

While a joint personal loan can be beneficial, there are a few things to keep in mind:

• Impact on Credit Scores: The co-applicant's credit score can impact the primary borrower's credit score. If one defaults, it affects both credit scores.
• Additional Documentation: Since both applicants must submit documents, preparing all the necessary paperwork can be time-consuming.
• Repayment Responsibility: The co-applicant shares the repayment burden. If the co-applicant defaults, the primary borrower is responsible for the entire loan repayment.
• Availability: Not all banks or financial institutions offer joint personal loans. It may also depend on the applicant's relationship with the bank.

Calculating Joint Personal Loan EMI

Understanding the EMI (Equated Monthly Instalment) is crucial. EMI can be calculated using the formula.

Where:

• P is the principal or loan amount.
• R is the rate of interest.
• N is the tenure or the number of years for the loan.

A personal loan EMI calculator can help you determine the monthly payment, total interest payable, and total amount payable for a joint personal loan.

Pre-Closure of Joint Personal Loans

Joint personal loans can also be pre-closed, though additional pre-closure charges might apply. Not defaulting on repayment is essential to maintain a good credit score.

Factors Affecting Joint Personal Loan Eligibility

While the basic criteria are essential, several other factors can impact your eligibility:

• Relationship Between Co-Applicants: Married couples may be considered lower-risk borrowers than friends or non-related co-applicants.
• Loan Amount and Repayment Tenure: Larger loan amounts and longer repayment tenures might require higher credit scores or income levels.

How Can You Improve Joint Personal Loan Eligibility?

If you're currently not meeting the eligibility requirements for a joint Personal Loan, don't worry! There are several steps you can take to boost your joint loan eligibility.

Raise Your Credit Score

Your credit score determines your eligibility for a joint Personal Loan. Here's how you can do that.

• Pay your bills on time
• Reduce your credit utilization
• Dispute any errors on your credit report

Look for More Income Sources

If your combined income or savings are currently low, it's time to take action:

• Take on a part-time job
• Cut back on unnecessary expenses

To Conclude

A joint personal loan can be a practical solution if your financial needs surpass your current income or your credit score is insufficient for a personal loan. By sharing the loan repayment responsibility, you can avail of a higher loan amount and increase your chances of loan approval.