Teaming up for a Personal Loan with a co-applicant enhances eligibility and borrowing capacity, potentially leading to better terms and reduced risk. In the quest for a comfortable life and the desire to provide for our families, it becomes a practical solution when individual financial reach falls short. Whether for home improvements or consolidating debts, teaming up with a co-applicant can bridge the gap between your needs and your loan eligibility.
Who is a co-applicant?
A co-applicant is someone who applies for a loan alongside the primary borrower and shares equal responsibility for repaying the loan. This partnership implies that both parties' credit histories, incomes, and debts are considered in the loan application process.
Applying for a loan with a co-applicant can be especially advantageous for individuals who may not have a strong financial profile to secure a loan on their own or for those seeking more competitive loan terms.
Additionally, in the context of Personal Loans, a co-applicant can play a pivotal role in mitigating the lender's risk, thereby increasing the loan's chances of approval. This approach can also lead to benefits such as reduced interest rates, higher loan amounts, and more flexible repayment terms.
When do you need a Personal Loan co-applicant or a guarantor?
Applying for a Personal Loan can sometimes require additional support. That's when bringing in a co-applicant or a guarantor can become essential. Here are the key factors to consider:
1) Credit score
If your credit score is lower than what lenders usually look for, having a co-applicant with a better credit score can make your loan application stronger. It's like teaming up with someone who has a good track record with money, which can help convince lenders that you're a safe bet.
2) Monthly income
When you apply for loans with a co-applicant, your incomes are considered together. This can increase the amount lenders think you can borrow because you both might seem more capable of paying back the loan collectively without any trouble.
3) Credit utilisation ratio
If it's high, lenders might think you rely too much on credit. A co-applicant with a lower ratio can balance this out, making your joint application look better to lenders.
4) Debt-to-income ratio
This is all about how much debt you have compared to your earnings. If the ratio is high, lenders might worry about your ability to take on more debt. A co-applicant with a lower debt-to-income ratio can make your application more appealing.
5) Lack of credit history
If you haven't used much credit before, lenders might find it hard to judge the risk associated with lending to you. A co-applicant with a solid credit history can help fill in the gaps, providing the lender with more confidence to approve your loan.
What should you look for in a co-applicant?
When scouting for a co-applicant for your Personal Loan, it's critical to consider a few key factors for a seamless loan approval process.
- Ensure the co-applicant has a robust credit score, preferably above 750, signalling reliability and a clean financial history.
- Verify whether the co-applicant has a steady source of income, whether self-employed or salaried, with a minimum net monthly income of ₹15,000 per month.
- The co-applicant must be ready with all necessary documents to fulfil the lender's Know Your Customer (KYC) requirements.
- A low credit utilisation ratio is key for the co-applicant, indicating they manage existing credit well without being over-leveraged.
Also Read: How can you get a Personal Loan online with 6 easy steps?
Conclusion
Embracing the option of Personal Loans with a co-applicant can greatly increase your borrowing capabilities and offer you a path to securing the funds you need with greater ease and potentially more favourable terms.
With Axis Bank's Personal Loan, you can effortlessly achieve your financial dreams and handle life's various expenses. Their competitive offers, including up to ₹40 lakh loan amounts, tenure flexibility of up to 84 months, and attractive interest rates starting at 10.75% p.a., are designed to fit seamlessly into your life. Add to that the possibility of applying with a co-applicant, and you unlock even more potential to secure a loan that’s right for you.
Embark on your Personal Loan journey with shared responsibility with a co-applicant. Step into a world of financial possibilities with Axis Bank today, and experience a tailored Personal Loan journey.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
