Personal Loans have become quite popular in recent times due to the ease of their availability. In addition, they do not even call for the need of collateral, thereby making them borrowers’ first choice when in need of immediate credit. The documentation required with a personal loan is also minimal that entails the basic personal and income proof documents with photographs.

As personal loans are unsecured, i.e. not backed by collateral, the lenders can base the decision of approval or rejection based on your credit score and income, with both the aspects assuming equal importance.

You are aware that the need for credit could arise at any point in life without allowing you the luxury of saving or planning. How well can you manage such situations when you need a personal loan and are faced with a bad credit score or are in a low-income situation?

The answer to this question would be a personal loan with a co-applicant.

Who is a co-applicant?

A co-applicant is a person who assumes the responsibility of the personal loan with you.  Co-application is a common feature when it comes to home loans, with spouses being the most favoured combination for co-application.  This feature is now being extended to personal loans too by some banks and financial institutions.

A co-applicant is equally responsible for the repayment of the loan as the primary applicant.  Credit scores and incomes of both the applicants are taken into account and form the basis of the decision. In case of a default, the credit scores of both the applicants take a hit and the lender is well within their limits to take action against both of them.  

Who can be a co-applicant?

Your spouse, parents or your siblings can be a Co-applicant of your personal loan. In the case of home loans, only certain combinations like parent-son, brothers, unmarried daughter-father/mother are allowed other than the usual loan application from spouse.

However, since a personal loan does not involve collateral or pledged entities (House, Gold, Vehicle etc), other combinations may also be allowed for co-application. This would again depend on the rules, regulations, and policies of your banker/ financial institution.

How would a co-application help?

As we pointed out earlier, co-application can help you in case of a low credit score or low income. But how exactly does it help?

In the case of co-application, the income of both the applicants is taken into consideration for one loan, thereby making you eligible for a bigger loan that could meet your requirements. Or make you eligible for a loan that you might find difficult to get approved for with a single income.

Similar is the case with your credit score. If you have a low credit score, then a co-applicant with a good credit score may help you sail through the approval for your loan as combined credit scores may help you.

In addition, the burden of repayment of the loan rests with both the applicants, so effectively you can split the burden of repayment so that one person is not taxed with the entire EMI amount.

Additional Reading:  How does a Joint Home Loan work to your advantage?

What are the challenges involved in getting a co-applicant for your loan?

A co-applicant reduces your burden of loan repayment and increases your chances of obtaining a loan. However, there are certain challenges involved in getting a co-applicant for your personal loan.

  1. Finding a Co-applicant: Not everyone might be lucky to find a co-applicant who is earning and has a good credit score.  Your parents may be ready to be your co-applicant, but if they are retired or do not have a (good) credit score, the entire purpose of having them as a co-applicant may be defeated.
  2. Additional Documentation: In the case of co-application of personal loans, the documentation needs will include a similar set of documents from both the applicants adding to the burden of making the required documents ready.
  3. Agreement Regarding Repayment of Loan: A co-applicant is equally responsible for the prompt repayment of the loan and their credit score is at stake if there is a default from the primary applicant's end. In case your co-applicant does not want to be a party to the repayment of the loan and has no say in the utilization of the loan, then it would be solely your responsibility to clear the loan. In cases like these, it might be difficult to reach a consensus.
  4. The Process May Get Delayed: Personal loans are known for quicker disbursal. However, when 2 applicants are involved, scrutiny of the extra set of documents may delay the process of loan disbursal.
  5. Not All Banks/ Financial Institutions Offer Joint Personal Loans: Not all banks or financial institutions offer joint personal loans. If you have a good relationship with your bank, you may request them to allow you to apply for a personal loan on joint mode.
  6. You May Lose Out Offers From Fintech Lenders: Fintech lenders disburse personal loans or even offer a Line of Credit, but most of these are done online and do not have provisions for Joint application.

If you have managed to find a co-applicant who can add to the weight of your application and a lender who has agreed to a joint personal loan, this process of the application would be as follows:

  • As per your need, calculate the required amount and make a primary inquiry with the lender regarding eligibility and income criteria.
  • Once your lender lets you know that joint application is possible in your case, get the list of required documents required. Generally, it should be the Identity Proof, Income Proof, Address Proof, Copies of PAN and Photographs.
  • Submit the required documents with the application. Online processes may not work here for all banks. It is good to check the submission process with your lender.
  • The application may be approved in a matter of 7-10 days. This would again depend on the individual lender and the documentation provided. 


Irrespective of the nature of the loan you go for, whether as an individual applicant or in a joint mode, make sure you make prompt repayments so that you can maintain a healthy credit score for all your future credit needs.


  1. Can I get a personal loan with a co-applicant?

A co-applicant is a person with whom an applicant can apply for a loan. A co-applicant can be your spouse, family, etc. In case you have a low credit score and want to avail a personal loan, you can look for a co-applicant with a good credit score to apply for one. This will improve your chances of getting a loan.

  1. How do I apply for a joint personal loan?

The co-applicant must meet the eligibility criteria of the loan provider. He/she must be earning and should have a credit score of 750 or above. Only if the joint applicant has a family relationship with the borrower can he/she be eligible for the loan. 

  1. Can personal loans be in joint names?

Joint personal loans are loans that you apply for jointly with somebody else. The co-applicant can be your spouse or partner, a sibling or other family member, or just a friend. If you apply for a joint personal loan, both applicants are considered liable for the loan repayment.

  1. Is it better to apply for a loan with a co-applicant?

Applying for a loan with a co-applicant can improve the loan approval chances and also the chances of getting favourable loan terms. After the loan application is approved and the loan is granted, the co-applicant can become a co-borrower of the loan.

  1. Does being a co-applicant affect your credit?

Being a co-applicant of a loan does not affect your credit score. However, your credit score could be negatively affected in case the primary account owner does not make timely repayments.