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Joint Personal Loans: What Are They?

Rachel Horan

Rachel Horan

May 27, 20214 minute read
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Whether you need finance for a car, medical bills, or a holiday trip, a joint personal loan can give you a better chance of being approved. It can also increase the likelihood of borrowing a larger amount of money. However, there are a few things to consider before taking on shared debt.

On this page:

    Get to know the basics of joint personal loans as well as the pros and cons to consider in this handy guide.

    What is a joint personal loan?

    A joint personal loan is a loan that you take out with another person. Whether that person is a spouse, partner, parent, friend, or sibling is up to you. Whoever you choose, this person is referred to as the co-borrower. This means that they are jointly liable for the debt. If you were unable to make your loan repayments, the co-borrower would be liable for meeting the repayment obligations and vica versa.



    It’s important to note that a co-borrower is not the same as a guarantor (or co-signer). The key difference between the two is liability. A guarantor is typically only liable for the debt owed after the lender has exhausted all other methods of collection from the primary borrower. On the other hand, a co-borrower is equally liable for the debt.

    Joint personal loans vs. personal loans: what’s the difference?

    While they both function the exact same, the key difference between a joint personal loan and a standard personal loan is the number of people attached to the debt. A joint personal loan sees two people responsible for the repayments, whereas a personal loan is taken out under one person’s name.

    Why do people apply for joint personal loans?

    A joint personal loan is a great way to share a financial obligation with another person that reaps benefits from the loan’s purpose. Unfortunately, if a financial institution decides that one party is not receiving a benefit from the loan, it will likely not be approved. For example, if you and a partner took out a joint personal loan for home renovations, you will both be receiving a benefit from the loan and therefore the credit provider can consider your application. However, if two people applied for a loan that live in separate states, they will most likely not both receive a benefit from the loan and the application, so the application might be rejected.

    A joint personal loan can be one way to purchase a meaningful item with someone. Taking out a joint personal loan with a loved one, such as a long-term partner, means that you are both sharing an asset. This concept might be appealing to you, and allows you to both pay off the item equally.

    Another reason people might consider applying for a joint personal loan is to be eligible for a larger loan amount. If you cannot afford to manage a large loan completely on your own, a joint personal loan can be handy. This is because lenders will consider both incomes, rather than just your own when assessing your personal loan application.

    Lastly, if you and your spouse are both finding it difficult to manage your separate loan repayments, you could apply for a joint consolidation loan. In this way, you are both paying off your different loans with one, simple repayment plan.

    What to consider before getting a joint personal loan

    Before you submit an application for a joint personal loan, it is important to carefully consider whether it’s the right choice for you. Taking on debt shouldn’t be taken lightly, particularly if the debt is going to be shared with another person.



    Here are some important questions you may like to ask yourself before taking out a joint personal loan:

    • Are they responsible with their money?
    • Are they going to be able to manage their loan repayments?
    • Have they ever had a loan before, and if they have, did they manage it well?

    While these questions can be difficult to discuss, it’s important for the financial health of both applicants. If one co-borrower is unable to make their repayment, and the other is unable to compensate for this, making late payments or defaulting on the loan will affect both people. Defaulting on a personal loan will negatively impact your credit score, and can appear on your credit report for years afterwards. This is why it is so important to decide whether a joint personal loan is the right decision for both people.

    Pros and cons of joint personal loans

    To sum up what we’ve discussed, here’s a quick list of some of the pros and cons of joint personal loans:

    Pros of a joint personal loan Cons of a joint personal loan
    Increases your chances of loan approval. Reliant on another person to manage the loan.
    You can apply to borrow more (because both incomes are considered). Liable for both payments if the co-borrower is unable to make their repayment.
    You can consolidate loans with another person (e.g. your spouse).

    How do I apply for a joint personal loan?

    Generally, applying for a joint personal loan will be the same process as applying for a standard personal loan. Whether it’ll be one or two separate applications is entirely dependent on the lender.

    To give you a broad idea of the information required for your application, the lender will typically ask for both of your personal details including your employment status and financial information. Typically, all information required for an application will be outlined on the lender’s website.

    Copyright © www.jacarandafinance.com.au Jacaranda Finance Pty Ltd ® ABN 53 162 078 195 Australian Credit Licence 456 404, Pawnbroking License Number 4221738. The information on this web-page is general information and does not take into account your objectives, financial situation or needs. Information provided on this website is general in nature and does not constitute financial advice.

    Rachel Horan
    Rachel Horan

    Written by Rachel Horan

    Rachel Horan is a Content Writer for Jacaranda Finance. Rachel has previously produced content for Brisbane City Council, Black & White Cabs, and Clubs Queensland. She has a Bachelor of Mass Communication with Distinction from the Queensland University of Technology.

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