Important disclosure

Joint Application Personal Loans

A joint application is when you apply for a personal loan with another person. The second person can be referred to as your co-applicant or co-borrower and may be a spouse, friend, family member, or someone you trust.

Typically, there are three parts to a joint application personal loan:

  • The loan will be in both of your names, but you’ll both need to qualify for the loan individually.
  • You both have equal ownership of the funds or whatever asset the loan was used to purchase.
  • You’re both liable for the loan – if one person stops making payments, the other will have to cover the remaining balance.

Terms from 1 to 5 years. Representative example: $10,000 loan over 5 years with rates from 7.99% to 46.96% APR would cost between $12,163 and $26,087, including fees. The interest can vary between $2,163 and $16,087.


How to apply for a joint application personal loan in Canada

The first step is finding a lender who allows joint borrowing. Once you find a loan that’s suitable for you and your co-applicant, you’ll need to submit an application that contains both your personal and financial details.

The lender will review the application details as a whole and check your individual credit reports before making a decision. If approved the money will be deposited into a joint bank account or one that you’ve both agreed to use.


Calculate your repayments

RBC personal loans

RBC
6 months
to 60 months
$5,000
to $50,000
15.00%
APR
n/a

RBC personal loans

RBC
6 months
to 60 months
$5,000
to $50,000
15.00%
APR
n/a

TD personal loans

TD
6 months
to 60 months
$5,000
to $50,000
16.83%
APR
n/a

Scotiabank personal loans

Scotiabank
6 months
to 60 months
$5,000
to $50,000
46.96%
APR
n/a

BMO personal loans

BMO
6 months
to 60 months
$5,000
to $50,000
46.96%
APR
n/a

CIBC personal loans

CIBC
12 months
to 60 months
$3,000
to $200,000
46.96%
APR
n/a

NBC personal loans

NBC
6 months
to 60 months
$5,000
to $50,000
46.96%
APR
n/a

HSBC personal loans

HSBC
6 months
to 60 months
$5,000
to $50,000
46.96%
APR
n/a

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Important questions to consider before taking out a joint personal loan

The questions below will help you minimize the risks associated with a joint personal loan:

  • Is your co-applicant reliable? – Do they have a history of meeting their financial obligations? Keep in mind you’ll be stuck with the entire debt if the other person defaults.
  • What do your finances look like? – You should both examine your finances to ensure you only borrow what you can afford.
  • What happens if the other person defaults? – It may be an uncomfortable discussion, but it’s essential to explore the worst-case scenario and come up with a solution. For instance, you can choose to apply for credit insurance which covers your payments in the event of illness, injury, job loss, or death.
  • What happens if the relationship turns sour? – Will your relationship with your co-borrower survive over the life of the loan? Decide if you’ll both continue servicing the loan amicably or refinance the loan so that only one person becomes responsible for the debt.

Pros and cons of joint personal loans

Pros

  • They increase your chances of approval. That’s because the payments will be covered by two people instead of one. This lowers the lender’s risk.
  • Your borrowing limit goes up. The lender considers both incomes, which increases the loan’s affordability.
  • They are suitable for debt consolidation. It’s possible to consolidate multiple debts since you can borrow more.
  • You can get a lower rate. This is especially true if one person or both of you have an excellent credit score.
  • It’s a great way to help another person build their credit score. For instance, a parent can take out a joint personal loan with their child who may have a short credit history.
  • They allow sharing of finances. If your finances are already combined, taking out a joint personal loan is simple. You can also borrow for a common goal, such as a wedding or a holiday.

Cons

  • They can potentially damage your credit score. If the other person defaults, you may be unable to handle the repayments on your own. If you are unable to service your debt, your credit score may decrease which will make future loans less affordable.
  • They may ruin relationships. The relationship can turn sour if one of you proves to be unreliable with repayments.
  • They don’t always offer the best rates. Taking out a joint personal loan can weaken your application if the other person has a poor credit score.

Difference between a joint application and a co-signed loan

  • With a joint loan, you use the money together. But, with a co-signed loan, you use the money by yourself.
  • A co-signer is only responsible for the payments after you default. But with a joint loan, you’re both liable for the payments from the start.
  • You can apply for a co-signed loan even if you don’t qualify, as long as your co-signer qualifies. However, both persons need to qualify when borrowing jointly.