Jairam Dhonde is a manager in a telecommunication company in Pune. His wife works as an analyst and his parents live in their village home in Saswad near Pune. Jairam wants to renovate his parent’s old house at a cost of approximately Rs.10 lakh.

When he approached his lender to apply for a Personal Loan, he was told he was eligible for a loan of Rs.6 lakh. Jairam thought of adding his wife as a co-borrower to enhance his eligibility limit.

There are many others who, like Jairam, fail to qualify for the loan amount they desire. Unlike home loans and gold loans, Personal Loans are not offered against any collateral and annual income, credit history, employment history, and capacity to repay are key factors when it comes to approval. Having a co-borrower helps you get your application processed under the high-income bracket. You can increase the loan amount by adding a co-applicant to your Personal Loan. But do check your eligibility before applying for a Personal Loan.

A word of caution, however: Not all lenders have a provision for a co-borrower. Moreover, it may not be easy to get a co-borrower for Personal Loans.

Here Are the Pros And Cons Of Having A Co-Borrower


  • You have a better chance of instant loan approval. A loan application is assessed on the basis of your combined income.
  • A co-borrower with a good credit history can help you enhance your loan limit.
  • If the co-applicant has a good credit record, you can negotiate and qualify for better rates.
  • Adding a co-applicant can help you meet the lending criteria of your creditor. The combined income determines your loan eligibility.
  • It is beneficial to take a joint loan when purchasing an asset or renovating a property.
  • The sanctioning criteria differ from lender to lender. The maximum limit depends on your repayment capacity. Say, a co-borrower has a good payment history. It would help you get the maximum limit.
  • Your spouse and parents can be co-borrowers for your Personal Loan. Some institutions even allow siblings to become co-borrowers.
  • You and your co-borrower can enjoy tax benefits under Sections 24 and 80C of the Income Tax Act, 1961.


  • There are also chances of loan rejection if your co-borrower has a poor credit score.
  • Personal Loans are unsecured. You can avail them without any collateral.
  • Suppose there is a loss in the regular income of your co-borrower. You should be in a position to pay his/her share of the Personal Loan liability.
  • If there is any default, it may hurt the credit score of both borrowers.

Co-borrowing is common in case of collateral loans like car loans and home loans. But now, financial institutions and banks also allow co-borrowers for Personal Loans. Adding a co-borrower to your Personal Loan could get you credit on more favourable terms. Most of these are online loans. But some online lenders do not allow a co-borrower for a Personal Loan. Get a co-borrower if it helps. But add one to your Personal Loan only if you can afford to repay the loan yourself.

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