Joint Personal Loan – Taking A Loan As A Pair

If you just got married, want to move out with a sibling or partner, or need an application boost, a joint personal loan might be for you. You can place a joint loan application across almost all the available loan types. But why take one?

Maybe you would need to find no credit check loans if you applied on your own. Or perhaps applying with a second person can grant you access to larger cash loans. Whatever your situation, if you know a person that you would like to share loan responsibilities with, joint personal loans could be for you.

Please note that specific ideas and products presented in this article may not be on offer by Monzi or the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

What is a joint personal loan?

If you take a joint personal loan, you will be splitting the debt between yourself and a second person. This can be extremely useful for several reasons. Although generally speaking, a joint personal loan may either improve your approval chances or increase the amount you can qualify for.

Typically you might take a joint personal loan with someone you are close with. Such as a spouse, friend, partner, or sibling. In some cases, maybe even a parent. Your lender may like to see that you have a strong relationship with the other person before approval. This is as you may be more likely to meet your commitments if you value your relationship.

This second person is known as a co-borrower, and you will carry equal responsibility for the repayments unless decided otherwise. Therefore, if one of you cannot meet your obligations, your lender will hold the other liable for the repayments. When it comes to joint personal loans or any joint loans, you’ll want a trustworthy and reliable co-borrower.

Why would you want a joint loan?

There are several reasons a joint personal loan or another type of joint loan can be worthwhile. Here is a compilation of some of the most common reasons you may consider a joint loan:

  1. One person has a poor credit history. If you have bad credit, partnering with better credit can increase your chances of approval. In some instances, it may even allow you to borrow more than you could on your own.
  2. You want to share an asset with someone. This is relatively common, especially among married and de facto couples. You may already share the financial load in other areas and want to tackle a mortgage together.
  3. Jointly consolidating debts could save you money. If your family member or partner and yourself have multiple individual debts, taking a new loan to consolidate could save you money. This is because you’d be reducing multiple repayments into one.

A joint personal loan or any joint loan is not always one size fits all. Your life circumstances will decide why you may want to take a loan like this. However, knowing that this is an option may give you access to more opportunities or a helping hand.

Where can you get a joint personal loan?

Many of the mainstream banks will offer joint personal loans. As will some private lenders if you are seeking private loans. Monzi cannot say who offers joint personal loans, each of the lenders in the Monzi network operate slightly differently, and we cannot speak on their behalf.

However, when it comes to larger loans, most mainstream lenders will give you the option to apply with a partner. As the next step for many newlyweds – and freshly de facto partners – is to settle down and own a home or a car together.

If you are unsure where to start looking for a joint loan, several free comparison tools are available to you. These tools allow you to gather a basic understanding of the loans on the market. They generally show you the accompanying interest rates, minimum loan amounts, terms, and repayments. However, if it’s individual personal loans that you are looking for, Monzi has got you covered.

Important considerations

Before you apply for any kind of joint loan, even if it is just a small joint personal loan, you should consider the big picture. It’s important to honestly evaluate whether your co-borrower will honour their commitment to the repayments. Even if your co-borrower is a new husband or wife, if they have a history of reckless spending and debt stacking, you may want to have a tough conversation.

No one likes a pessimistic outlook; however, you need to be honest with yourself about whether you see yourself remaining together or close with your co-borrower. Consider a contingency plan in case something happens that drives the two of your apart. In some cases, it may be better to have your name solely on the documents, and a verbal agreement with your partner to pay their share.

Some questions to ask include, how may a joint loan benefit you? Do you need a second person? What existing debts do you both have? Can you trust each other? A brutal, honest conversation early may save you a lot of trouble further down the track.

Who can you apply for a joint loan with?

Firstly, note that a joint personal loan, and most other joint loans, can only be between two people. You may be able to get multiparty loans in some circumstances. However, this is less common. When you apply for a loan, there are four types of people who may be able to be your co-borrower. These include:

  1. Your partner: a loan with your husband/wife or de facto partner is the most common joint loan.
  2. A parent: taking a loan with a parent can be handy for getting a foot into the property market. You also have the option of a guarantor loan here.
  3. A sibling: you could take large personal loans with a sibling to travel together or even a joint mortgage to move out and share the financial load.
  4. Friends: if you want to take a loan with a close friend, you can. However, ask yourself those tough questions first to avoid friendship strain.

There may be other people you can take a loan with, such as business partners. However, this moves away from joint loans into the multiparty and commercial loans categories. Speak with your lender if you are unsure what your next move may be.

Is a joint loan more likely to be approved?

Yes. Providing you don’t seek to apply with a person who has bad credit when you also have bad credit. Generally, if one person has a better credit score than the other, your chances of approval will increase. Even if your credit report is merely average, applying with a co-borrower with excellent credit may allow you to apply for a much more significant amount.

As long as you are both eligible and meet the terms for your lender’s application process, you will generally increase your approval chances.

Joint personal loan eligibility

Joint personal loan eligibility is similar to individual personal loan eligibility, except times two. This means that whatever criteria you would have to meet individually now also has to be met by your partner. Eligibility will vary depending on the loan type and the lender. Financial institutions like banks are likely to be far stricter than private lenders.

Monzi cannot say what the eligibility will be for joint personal loans or other lenders. However, you can read more about the individual eligibility for our lender-finder on our homepage.

Pros and cons of joint loans

As with any financial decision, pros and cons apply to joint personal loans. Here is an outline of things to think about before you begin a joint loan application.

Advantages

  • Increased approval chances
  • Shared repayment responsibilities
  • You may be eligible to borrow more significant amounts.
  • Can potentially jointly consolidate multiple debts

Disadvantages

  • You could end up liable for both repayments.
  • Your lender can pursue one person for legal action should your loan go awry.
  • You will be reliant on a second person.

Naturally, however, the success of the joint loan relies on how you are as a borrower and what faith you have in your partner. Don’t skip over the warning signs that this venture could go wrong. Mistakes here could negatively affect your credit score.

The joint loan application process

As mentioned when discussing eligibility, the application process will vary depending on the loan type and the lender. If you seek a joint mortgage, you will likely need to submit far more documentation than you would need for personal loans.

Monzi cannot discuss what you may need to provide for other lenders’ application processes. We can, however, tell you what you may need for an individual personal loan application through the Monzi lender-finder.

Our objective is to make the process as simple as possible to get the outcome you have been looking for with ease. Once you start your application and tell us how much you require, you will need to provide us with a small amount of information about yourself. From there, it’s over to us. We will try our best to try and match you to a lender in as little as 60 minutes. Please note that for us to do so, you will need to apply within business hours. You can place your application at any time; however, you will have to wait until the office reopens the next working day to match. If we are successful, your lender will be in contact with you to finish the loan process.

Taking a joint personal loan

Joint personal loan calculator

You can use a ‘how much can I borrow calculator’ for a joint loan. Most of these calculators will ask you to select how many people are applying. By choosing two, you may need to enter more information on behalf of your potential co-borrower. This will help the calculator to be more accurate in its estimations.

These calculators typically ask for a handful of information. Aside from choosing the applicants, you may also need to enter some information about the number of dependents you have. If it is a mortgage loan that you are seeking, you will also want to select whether you are looking for a home or an investment property. From there, you will then have to enter the information about you and your co-borrower’s income and expenses.

The calculator will then generate the minimum and maximum you can borrow. It may also give you additional information, such as principal and interest repayments and the loan term. You should be able to alter some of this information to see how it affects you.

Joint loan for debt consolidation

One reason that you may be interested in a joint loan is for debt consolidation. This is most common amongst couples looking to combine their expenses and potentially save money in the long run. Debt consolidation involves taking a larger loan that will encompass all the existing debts you already have. This will then mean that you use this loan to pay off everything else and only focus on one interest rate and term rather than multiple.

This can be very handy if the pair of you have been struggling to keep track of your expenses and want to clean the slate and focus on one, more considerable, cost. You can then tackle it together and share the burden. Debt consolidation via a joint personal loan is essentially the same as when you refinance a personal loan.

Joint mortgage loan

Whilst a joint personal loan can be standard, joint mortgage loans are perhaps the most popular among borrowing pairs. This is due to several reasons. Whether it’s lovebirds looking to settle down and start a family. Families moving back in together to give each other a helping hand. Or maybe you and a friend looking to pool your funds and break into the property market together. Whatever the driving factor might be, a joint mortgage loan can be advantageous.

However, did you know that you can split the ownership in various ways when it comes to a mortgage? For example, if you plan to purchase a house with a younger sibling who doesn’t earn as much, you could split your loan 60:40 rather than 50:50. This means that if one person contributes less, you can adjust their level of ownership to suit. If you change the ratio, you will list as ‘tenants in common’ on your contract. However, if you split it evenly, you will be ‘joint tenants’ and jointly own the whole property.

Joint car loan

If you already have a joint mortgage, a joint car loan naturally feels like the next step. You may be more likely to take joint car loans with a partner than you would with a friend or family member.

As with any other joint loan, you would equally share the burden of buying a car. It also means you are likely to qualify for a more significant amount, should you need to purchase a bigger car that fits the whole family. However, a joint personal loan can also serve the same purpose as a loan explicitly intended for a vehicle.

If you are looking for an individual personal loan to use for a car, why not find a lender through Monzi. Borrowing for a vehicle through one of the Monzi lenders is a great possible use for your personal loan.

Loans with a partner outside of de facto

The success of a loan with a romantic partner outside of a marriage or de facto relationship is possible with some loan types. You may simply apply for a joint personal loan as friends, considering you don’t align with the other relationship options. However, when it comes to big loans like mortgages, you may struggle.

This is because mortgage lenders like you to be either married or de facto. Particularly if you are looking to apply for government grants for first home buyers. However, as you have the option to apply as friends, you could get away with doing so. A mortgage broker may be helpful if you are struggling to get loan approval outside of a legally recognised relationship. Once you get settled and live together long enough to be considered ‘de facto’, you could consider refinancing to have your relationship status upgraded on your contract. However, this is entirely up to you, and you should consider speaking with a broker or lender before making such a decision.

Loans for married couples

If you have just gotten married, the government will legally recognise your relationship, and you can select the married box on your loan application. With a joint personal loan, you may have the option to choose ‘married and paying bills together’. Otherwise, the other choice is ‘married and paying bills separately’. The only bearing this has is to help your lender gauge how responsible you are with your repayments.

Aside from this, being married can be pretty advantageous for home loans. This is because it has the potential to double your chances of receiving home loan approval.

Joint investment loans

An investment loan with a partner is almost exactly like regular joint home loans. The only difference is that you and your co-borrower may be able to use the equity of your current home to increase your approval chance.

Joint investment loans for property may not be ideal as they can make each co-borrower’s debt to income ratio appear pretty high. This is as you are both responsible for the total value of the loan. Thereby making it harder to get individual loans. It is unlikely that you would take margin loans with another person as these loans are typically an individual’s business.

Joint personal loan bad credit

A joint personal loan can be excellent if you have a bad credit history. This is because it allows you to redeem your chances with your co-borrowers better credit score. However, if we turn the tables and you have a better credit score, you will need to do some thinking. Why? Because if your co-borrower reverts to their old ways and cannot finish their loan repayments, then you will be expected to pay off what’s left solely.

If the pair of you took small personal loans together, this might not be so bad as you may be able to cover it on your own without going into debt. However, if you are stuck with a large personal loan that you cannot repay, it will damage your credit score and your relationship. Hence, joint loan ventures should always be well thought out.

Guarantor loans

If you are a young person looking to get into the property market but are having a rough time with it, guarantor loans may help. A guarantor loan allows a family member to secure your mortgage with the equity from their home. This takes place most commonly between parents and their children.

Again, however, there is that element of risk if you fail to make your loan repayments. This is because you will then be leaving your parents with the burden of repaying your loan. If they cannot do so, the bank can potentially repossess your parent’s house. However, it truly is risk versus reward, as having a guarantor on your loan can potentially allow you to skip the need for a deposit entirely. Friends generally cannot go guarantor on your loan, however. This is due to the potential risk and the notion that you are less likely to hurt family members.

How can you get out of a joint loan?

Ideally, you won’t need to walk from a joint loan, and your relationships will remain steady. However, this is not always the case. Due to this, there are ways to split from your joint loan. If your partner wants to leave due to divorce or separation, or a family disagreement, you can have them removed from the loan. To do so, you will need to qualify to cover the remaining loan value on your own. You can then refinance individually to have your co-borrowers name removed. Consider using a refinance calculator when deciding your next move.

Another option that you have available to you is to buy your partner out. This means that you both agree on a reasonable selling price for the property and seek the appropriate legal advice. You then buy your partners share and thereby remove them from the mortgage. The final option you have available to you is to both agree to walk and sell the property entirely. Once you’ve done this, you can pay out your loan and leave the relationship in the past. It’s always best to first try and avoid this, however. If you are looking for advice on relationships and money, MoneySmart has an excellent page worth the read.

Do you need to secure a joint loan?

Yes. Regardless of whether you apply with a second person, you will almost certainly need to provide a deposit or collateral if you are looking for a loan. If it is a joint mortgage loan, you are more likely to put forward a deposit. This deposit will need to be a certain percentage of the loan-to-value ratio (LVR) to avoid paying extra fees such as lenders mortgage insurance.

However, if it is a joint personal loan or a joint car loan, you will need security. Typically, with a car loan, this security can be the car itself. However, if it is a personal loan, you can provide any of the assets listed on your lender’s approved securities list (ASL).

However, if you are looking at an individual personal loan through the Monzi lender-finder, you may not need security. This does depend on the lender and usually requires you to be borrowing less than $2,000. But, it will speed up the process if you need same day cash loans.

Does Monzi offer joint loans?

As there are many lenders in our network, we cannot speak on behalf of them all. This is because each lender operates differently. If you are looking for an individual personal loan, you are more than welcome to begin the application process.

Don’t begin the process if you still have questions, however. Monzi has several informative articles available about our service that may be able to assist you. Although, the best way to get your questions about our lender-finder answered, is to ask the team directly. If you have any questions, don’t hesitate to reach out to the Monzi team at hello@monzi.com.au. We are happy to help and look forward to hearing from you.

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You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000

Terms

12 months (minimum)

12 months (maximum)

Costs

20% upfront establishment fee

+ 4% monthly fee

Example

Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. The minimum and maximum loan term is 12 months. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Loan amount

$2,001 - $4,600

Terms

13 months (minimum)

24 months (maximum)

Costs

48% Annual Percentage Rate (APR)

67.41% Comparison Rate p.a.

Example

Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principal Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Annual Percentage Rate (APR) for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. The minimum loan term is 13 months and the maximum loan term is 24 months. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.

Loan amount

$5,000 - $10,000

Terms

13 months (minimum)

24 months (maximum)

Costs

21.24% Annual Percentage Rate (APR)

48% Comparison Rate p.a.

Example

Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principal Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Annual Percentage Rate (APR) for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. The minimum loan term is 13 months and the maximum loan term is 24 months. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.