When it comes to borrowing money, personal loans are a popular choice among individuals in need of funds for various purposes. However, eligibility criteria play a crucial role in determining whether your personal loan application will be approved or rejected.
In some cases, lenders may require you to have a co-applicant for the loan. But how exactly does having a co-applicant affect your personal loan eligibility? Who can be a co-applicant for a personal loan?
In this article, we will explore fast online loans with cosigner or the eligibility of a co-applicant for a personal loan.
Understanding Personal Loan Eligibility
Before delving into the impact of a co-applicant on your personal loan eligibility, let's first understand what constitutes personal loan eligibility.
To be eligible for a personal loan, you typically need to meet certain criteria set by the lender. These criteria usually include being an Indian resident employed with an MNC, public or private limited company. You should be between 21 and 58 years of age, have at least a graduate degree with a minimum work experience of one year, earn a minimum income (usually starting from Rs 25,000), and possess a credit score of 700 and above.
Now that we have established the basic eligibility criteria for personal loans, let's move on to discussing how having a co-applicant for a loan and your eligibility.
How Does a Co-Applicant Affect Your Personal Loan Eligibility?
Adding a co-applicant to your personal loan application comes with its own set of advantages and disadvantages. Here's how having a co-applicant can impact your personal loan eligibility:
- Credit Score: Your credit score plays a significant role in determining your eligibility for any type of loan. When you apply for a joint personal loan with a co-applicant, their credit score is considered alongside yours. If your co-applicant has an excellent credit score, it can enhance your chances of loan approval and potentially qualify you for higher loan amounts at lower interest rates. On the flip side, if your co-applicant has a low credit score, it can lower your eligibility and reduce the chances of loan approval.
- Income: Lenders evaluate your income to determine your repayment capacity. When you apply for a personal loan with a co-applicant, the lender considers the income of both applicants to calculate the loan amount you are eligible for. If you have a low income, having a co-applicant with a higher income can bridge the gap and enhance your personal loan eligibility.
- Repayment Responsibility: When you have a co-applicant on your personal loan, both parties share the responsibility of repaying the loan. If either party defaults on the repayment, it can negatively impact their credit score and affect future creditworthiness. It's crucial to ensure that both you and your co-applicant have a clear understanding of the repayment obligations before taking out a joint personal loan.
- Loan Amount and Interest Rates: Having a co-applicant with a higher credit score or income can help you secure higher loan amounts at more competitive interest rates. This is because lenders consider the combined financial strength of both applicants when determining the terms and conditions of the loan.
- Additional Documentation: When applying for a joint personal loan, you will be required to submit additional documentation related to your co-applicant. This includes their proof of identity, address proof, income documents, etc. Ensure that both you and your co-applicant have all necessary paperwork in order to avoid any delays in processing your loan application.
It's important to note that while having a co-applicant for a personal loan can increase your chances of approval and potentially offer better terms, it also comes with its own set of responsibilities and risks. Both parties should thoroughly understand their roles and obligations before proceeding with a joint application. So, decide carefully before choosing who can be a co-applicant for a personal loan.
Who Can Be a Co-Applicant for Your Personal Loan?
Now that we've explored how having a co-applicant can impact your personal loan eligibility, let's discuss who is eligible to be a co-applicant for your loan. In India, you can apply for a joint personal loan with the following individuals:
1. Spouse:
Applying for a personal loan with your spouse is a common practice. It allows you to collectively meet the eligibility criteria and combine your incomes to qualify for higher loan amounts.
2. Parents:
If you are financially dependent on your parents or vice versa, you can opt for a joint personal loan by including them as co-applicants. This is particularly helpful when you need higher funding or when your parents have a better credit score or income.
3. Siblings:
In some cases, siblings may choose to apply for a joint personal loan to fulfill shared financial goals or obligations. Similar to other co-applicants, siblings' combined income and creditworthiness can enhance their eligibility and borrowing capacity.
It's important to remember that not everyone can be a co-applicant for your personal loan. Lenders typically require the co-applicant to be a close family member with whom you share a financial relationship or obligation.
Conclusion
Having a co-applicant for your personal loan can significantly impact your eligibility, potentially enhancing your chances of approval and favourable terms. However, it's crucial to carefully consider all aspects before opting for a joint application. Evaluate the credit score and income of your potential co-applicant and ensure clear communication about repayment responsibilities.
If you're considering applying for a personal loan, visit Tata Capital's website to explore their range of personalised loan options tailored to suit diverse financial needs.
Remember, while having a co-applicant can benefit your personal loan eligibility, it is important to thoroughly evaluate your financial situation and make an informed decision that aligns with your long-term goals and objectives.
So, whether it's a two-wheeler loan or a personal loan, carefully assess your requirements and choose the option that best suits your needs.
21 June 2024
5 mins read
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