Did You Know? You Can Take a Joint Personal Loan
A Personal Loan is a multi-purpose loan that does not require any collateral. You can use a Personal Loan to meet any type of personal or business expenses. These two reasons make a Personal Loan a very sought after credit product.
For those unaware about a Personal Loan must know that there are some eligibility criteria:
- Age – you must be at least 21 years and above to apply for a Personal Loan.
- Occupation – your occupation determines your income and consequently, your repayment capacity. Thus, a Personal Loan is only offered if you are gainfully employed. You should be a salaried or a self-employed individual having an earning record to qualify for a Personal Loan.
- Income – there is also an income criterion to apply for a Personal Loan. Every lender prescribes a minimum level of monthly income of the borrower. If your income meets this minimum level, you can avail a Personal Loan easily.
How is the Loan Issued?
Since a Personal Loan is an unsecured loan, lenders allow you a loan based on your income and repayment capacity. Your occupation is judged, income level is assessed and the repayment capacity is calculated. Based on these parameters, a loan amount is finalised. For instance, you apply for a Personal Loan of Rs.5 lakhs. Before sanctioning this loan, the lender would determine whether you are eligible to avail such a quantum of loan. Your occupation and income details would help the lender determine your eligibility. If you qualify, Rs.5 lakhs would be sanctioned as a loan. However, if your eligibility is low, the lender might allow only Rs.3-4 lakhs as a loan.
What is a Joint Loan?
Loans which are applied jointly with two or more persons are called joint loans. In a joint loan, all the applicants are considered as borrowers and their combined eligibility parameters are judged to sanction the loan.
Applying for a Personal Joint Loan
You can apply for a Personal Loan jointly with your spouse or parent. When you apply jointly, you can increase your eligibility for the loan and thus avail a higher amount. Both you and the joint applicant (spouse or parent) would be responsible for paying off the loan.
Advantages of Joint Application of Personal Loan
Applying jointly for a Personal Loan has its benefits.
- You can get a higher amount of loan when you apply jointly. Since lenders combine the eligibility criteria of the other applicants, the joint income level increases. A higher income of the borrowers makes lenders lend a higher amount of loan. So, if you want to get a higher value of the loan, apply jointly.
- If you have a poor credit score and want to get a Personal Loan, you might find the job difficult. Even if the lender allows you a loan with bad credit, the interest rates on the loan would be very high. In case you apply jointly, a good credit score of the other applicant implies that you can easily get a Personal Loan. Also, the rate of interest could be lowered.
Disadvantages of Joint Application of Personal Loan
While applying jointly for a Personal Loan has its advantages, there are disadvantages too.
- All the borrowers are responsible for paying the loan. For example, a couple has availed a joint Personal Loan. If the husband dies before repaying the loan, the wife would face the burden of loan repayment as she was also a joint borrower.
- As a joint borrower, you cannot get out of the loan before the loan tenure is over.
- If there is any default in repayment of the loan, your credit history would also be hampered as you are a joint borrower.
So, before applying for a joint Personal Loan, understand its benefits and drawbacks. Make a joint application if necessary. If interested, you can check your loan eligibility before you decide to apply for a joint Personal Loan.