Discover what co-applicant or joint loans are and how they can boost your chances of getting a personal loan with a low credit score. Learn about the benefits, eligibility, and top loan options available.

Navigating the world of personal loans with a low credit score can be challenging, but co-applicant or joint loans offer a viable solution. By applying with a co-applicant, you can significantly improve your chances of loan approval and access better terms and interest rates. This comprehensive guide will explain how co-applicant loans work, their benefits, and the top loan options available for those with subpar credit scores. Whether you want to renovate your home, start a business, or meet other financial needs, a joint loan could be the key to achieving your goals despite a low credit score.

What are co-applicant loans or joint loans?

Co-applicant loans are taken not by a single person but by two. Both parties who applied for the personal loan will be considered equally responsible. The co-applicant profile will help to increase your attractiveness for your loan application, gaining you better interest rates and terms.

Why co-applicant or joint loans?

Co-applicant or joint loans become increasingly helpful for applicants with bad or poor CIBIL/ credit scores or other eligibility criteria. You will also benefit if your co-applicant credit profile is high and consistent throughout their history. Their profile will boost your creditworthiness and make you eligible for the loan. 

Can this improve your chances of getting a personal loan with a bad or poor CIBIL score?

Yes! Applying jointly can improve your chances of getting the credit, even with a poor score. It can help in the following:

• Increased principal amount: Since two individuals collectively request the amount, you might be eligible for an increased principal amount.
• Improved creditworthiness: Both individuals are at equal responsibility, so criteria are applied to both applicants. If the co-applicant has a better salary, employment or any other criterion, it will boost your profile. It will help your application in terms of credit score as well. 

Conversely, if the co-applicant credit profile or the criteria are poor, the total application can be affected negatively. 

• Improved credit profile: Once the repayment starts, since both are equally responsible, the credit score will improve with the regular repayments over time.
• Reduced debt-to-income ratio: The debt-to-income ratio is essential in calculating repayment capacity. Ideally, this should be less than 40%. With another person sharing the weight of the loan, this ratio is reduced considerably.
• Better loan terms: Since your joint profile becomes more attractive to the lender, you will get lower interest rates and other terms in the loan contract.

Which are the joint loans which are available for low CIBIL scores?

Union Bank Personal Loans:

Union Bank considers a CIBIL score of 700 as the benchmark between excellent and poor credit scores. As long as your score does not go below 650, you should have a chance to get that loan approved. Since your spouse is supposed to be your co-applicant, if you do not want to put any collateral, their credit score can help your application boost. A co-applicant/guarantee can also be your co-employee if you are single, divorced, or widowed.

There are 2 schemes of eligibility for the Union Bank Personal Loans:

Scheme A (tie-up): 

• Permanent/ Confirmed employees of reputed private institutes/ organisations
• Minimum monthly gross salary of Rs. 20,000/- for selected cities, Rs. 15,000/- for the rest.

Scheme A individuals can borrow up to Rs. 15 Lakhs without any lower limit.

Scheme B (Non-tie-up):

• Permanent/ Confirmed employees of reputed private institutes/ organisations
• Minimum monthly gross salary of Rs. 20,000/- for selected cities, Rs. 15,000/- for the rest.
• Should be a customer of the bank for at least 6 months before applying for the loan
• Maintaining salary account with Union Bank

Scheme B individuals can borrow up to Rs. 5 Lakhs for the first time and up to Rs. 15 Lakhs with a satisfactory repayment history.

Union Bank offers various types of personal loans based on employment.

1.Personal Loans for salaried and non-salaried

Credit score below 700

2.Professional Personal Loans for Salaried and non-salaried 

Credit score below 700

The co-applicant should have a minimum credit score of 700 for a Professional Personal loan.

For more details on interest and terms, refer to the same source on the document from Union Bank.

TATA Capital Personal Loan

TATA Capital offers their clients attractive personal loan offers and allows co-applicants to improve their credit scores and loan eligibility. Like Union Bank, TATA Capital considers 700+ the best score to get your applications approved quickly. However, with a co-applicant, the chance of getting the loan can improve considerably, even if you have a sub-par CIBIL or credit score. The co-applicants can be your spouse, parents or siblings.

Principal Amount: Rs.75,000/- to Rs. 35 Lakhs

Interest: starting from 10.99%

Tenure: Up to 6 years

Interest depends not solely on the person's credit score but on various other factors. For more details, refer to the TATA capital website for Personal Loans.

FIbe Personal Loan

Fibe personal loans can be applied jointly. Fibe is already attractive to people with low credit scores due to its different creditworthiness scales. You can learn more about it in this read about personal loans for individuals with low credit scores. 

The credit scale for Fibe is based on the alternative credit data, which is not directly related to the credit. The vast data from different sources, such as utility bill payments, insurance, social media, etc., are considered for creditworthiness.

In addition, Fibe also provides a facility to apply jointly for a personal loan, which makes your loan application approval easier.

• Principal amount: Up to 5 Lakhs
• Interest rate: starting from 16%
• Tenure: 3-36 months

Refer to Fibe Personal Loan for more details.

Kotak Personal Loan

Kotak personal loans can be applied jointly with your spouse, parents or siblings. Kotak has several eligibility criteria for the application, which are as follows:

• You should be an Indian resident employed with an MNC, public or private limited company.
• You must be between 21-58 years of age.
• You should be at least a graduate with a minimum work experience of 1 year
• Your minimum income should be Rs 25000, depending on your city.
• Minimum credit score of 700

The co-applicant will enhance or reduce your credit score depending on their score. The income and employment of the co-applicant will help you improve your eligibility.

Other details of the loan are:

• Principal Amount: up to Rs. 40 Lakhs
• Interest rate: starting from 10.99%
• Tenure: Up to 6 years

Refer to Kotak for more details

Are joint loans better than single?

Joint loans are typically used for home renovation, property acquisition, construction, business needs, and other scenarios where a more significant loan amount is required. A co-applicant reduces the risk carried by a single person and eases the repayment weight.

In addition, joint loans can provide both applicants with tax benefits and improve credit scores in the future. Learn more about the tax benefits you can claim on personal loans.

Also, as mentioned previously, it can help when the applicant’s credit score is not optimum.

Co-applicant loans can be a game-changer if you struggle to get personal loans because of your credit score or other factors. By sharing the loan responsibility, you can improve your creditworthiness, access better loan terms, and even secure higher principal amounts. With options like Union Bank, TATA Capital, Fibe, and Kotak, you can find a suitable joint loan that meets your needs. Always ensure your co-applicant has a strong credit profile to maximise the benefits. Joint loans make borrowing more accessible and provide opportunities to enhance your credit score and enjoy tax benefits. Explore these options and choose the best fit for your financial situation.

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