Whether you are funding a family wedding or a personal vacation, one usually needs some kind of external financial support to meet these expenses. A personal loan is an option worth considering in these scenarios. Sometimes the loan amount that you have applied for might be more than enough for what you wish to fund. In such cases, enlisting the aid of a personal loan co-applicant is wise. A personal loan co-applicant’s purpose is to share the loan repayment responsibility with the primary borrower. Using a personal loan EMI calculator will allow you to see how much you can save when you get a personal loan with a co-borrower.
Most lenders offer the option for co-borrowing, and one’s personal loan eligibility remains the same whether they are the principal borrower or the secondary borrower. However, each lender will have its own set of guidelines with regards to granting permission to the co-applicants. Typically, it is spouses who are favored by lenders as co-applicants. Occasionally, siblings can also become co-applicants for the same personal loan.
There are a host of benefits to adding a co-applicant to one’s loan.
By increasing your income you are bettering your chances of receiving your loan. Your personal loan eligibility will be based on the total income on your application, which may include a co-applicant’s income. As both parties will share the burden of repayment, a loan provider may be more inclined to give out the loan to those who employ the use of co-applicants.
Having a co-borrower on board also reduces your debt-to-income (DTI) ratio. The primary reason personal loan applications are rejected is due to a high debt to income ratio of the borrower. This ratio is that which looks at your total EMI demand each month in contrast to your monthly income. Your EMI demand can be known in advance through a personal loan EMI calculator. As the income of both applicants is added when a co-applicant shares the loan with you, the DTI ratio is lowered.
A third way in which they benefit borrowers is by enabling those with a low credit score to avail of a personal loan. Co-borrowing allows individuals to gain personal loan eligibility even when their credit score may be lower than is typically necessary. This is because the cumulative credit score will rise if their co-applicant has a higher credit score. This makes them eligible to receive a loan.
Here are a few key pointers to remember if you wish to co-borrow or to enlist the help of a co-borrower for your personal loans.
As mentioned earlier, when it comes to the loan application process for joint loans, one can still make use of personal loan EMI calculators. However, since there are two applicants, the application procedure may take longer than usual.
This post was last modified on 18th October 2020 4:57 pm
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