Qualifying for a personal loan depends on several factors including your income, credit score and current liabilities, among others. In some cases, as a primary borrower, you may fail to meet the eligibility criteria to avail of a personal loan because of a poor credit score or inadequate income.
In such a scenario, having a co-borrower (co-applicant) and making a joint application can enhance your overall eligibility. Read on to know how.
Who can be a co-borrower for a personal loan?
Financial institutions don’t allow just anyone to become a co-borrower for a personal loan. Generally, only your spouse or parents can function as your co-borrowers. Some institutions may allow siblings to be co-borrowers. However, you need to find out if your prospective lender has any such provision.
When you add a co-borrower to your loan application, the joint income is taken into consideration by the lender. Thus, if your own salary is insufficient, your co-borrower’s income bridges the gap. Also, adding a co-borrower with a large income might make you eligible for a bigger loan amount at a competitive interest rate.
Essential things to watch out for
While a co-borrower with a good income can certainly boost your personal loan eligibility, there are certain essential things you need to watch out for. Note that it’s not only the income of the co-borrower that's taken into account by the lender, but also the credit score.
While the co-applicant having a good credit score can certainly give your eligibility a much-needed boost, a poor score can dent your chances of procuring the loan. Hence, it’s important for you to find out if your co-borrower has a good credit score or not.
Also, when applied for jointly, the onus of paying the EMIs rests on both of you. In case your co-borrower fails to pay his/her part of the EMI, you must be ready to shoulder your co-applicant’s share of the payments as a default will affect both your credit scores.
Adding a co-borrower – a prudent way to enhance loan eligibility
Not only does having a co-borrower enhance your personal loan eligibility, it also gives you an opportunity to avail a larger amount at better rates.
With pre-approved offers from Bajaj Finserv on a gamut of loans including home loan, business loan and personal loan, availing finance is an easy and hassle-free affair. Know your pre-approved offer by sharing a few basic details.
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