In today’s fast-paced world, personal loans have become a popular financing option for individuals looking to fulfil their dreams or tackle unexpected expenses. However, securing a personal loan with favourable terms can be challenging, especially if you have a low income or a less-than-perfect credit score. This is where a personal loan co-applicant can make a significant difference in your loan eligibility and help you unlock higher loan amounts.
A co-applicant is an additional person who applies for a loan alongside the primary borrower, sharing equal responsibility for repaying the loan. By involving a co-applicant, you can enhance your chances of loan approval and secure better terms. Let’s dive deeper into the role of a co-borrower in boosting your personal loan eligibility.
Combining Incomes for Higher Loan Amounts
One of the primary benefits of joint personal loans is the ability to combine incomes, which can significantly increase your loan eligibility. When you apply for a personal loan with a co-applicant, lenders consider the combined income of both applicants, allowing you to qualify for higher loan amounts.
For example, let’s say you earn a monthly income of ₹40,000, and you’re looking to apply for a personal loan. If you apply alone, the maximum loan amount you may be eligible for could be limited. However, if you involve a co-applicant who earns an additional ₹35,000 per month, your combined income would be ₹75,000, potentially making you eligible for a higher loan amount.
| Applicant | Monthly Income | Loan Amount (Alone) | Loan Amount (Joint) |
| Primary | ₹40,000 | ₹2,00,000 | ₹4,00,000 |
| Co-applicant | ₹35,000 | ₹1,75,000 |
Enhancing Credit Profile with a Co-applicant
Another significant advantage of having a co-applicant is the potential to enhance your credit profile. If your co-applicant has a strong credit score and a stable income, it can greatly improve your overall creditworthiness in the eyes of lenders.
A good credit score indicates responsible credit behaviour and a lower risk of default. When you apply for a personal loan with a co-applicant who has a high credit score, lenders view your application more favourably, increasing your chances of approval and securing better interest rates.
To check your credit score for free, you can visit the Airtel Finance Credit Score page and get your score instantly.
Factors to Consider When Choosing a Co-applicant
- Credit Score:
- Ideally, choose a co-applicant with a credit score above 750.
- A higher credit score indicates better creditworthiness and can improve your loan terms.
- Income Stability:
- Look for a co-applicant with a stable and reliable source of income.
- Lenders prefer co-applicants who have been employed for a considerable period.
- Debt-to-Income Ratio:
- Select a co-applicant with a low debt-to-income ratio.
- This ratio compares an individual’s monthly debt obligations to their monthly income.
- A lower ratio suggests better financial health and ability to repay the loan.
Longer Repayment Tenures and Lower EMIs
When you apply for a personal loan with a co-applicant, you may be eligible for longer repayment tenures compared to when you apply alone. This is because lenders consider the combined repayment capacity of both applicants, allowing for extended loan terms.
Longer repayment tenures can significantly reduce your monthly loan instalments, making the loan more manageable and affordable. Let’s take an example to understand this better:
Suppose you want to take a personal loan of ₹5,00,000 at an interest rate of 12% per annum. If you apply alone and are offered a repayment tenure of 36 months, your monthly EMI would be approximately ₹16,600. However, if you apply with a co-applicant and are granted a longer tenure of 48 months, your EMI would reduce to around ₹13,300, making it more feasible for you to manage your monthly finances.
| Loan Amount | Interest Rate | Tenure (Alone) | EMI (Alone) | Tenure (Joint) | EMI (Joint) |
| ₹5,00,000 | 12% p.a. | 36 months | ₹16,600 | 48 months | ₹13,300 |
Shared Responsibility and Risk Mitigation
Applying for a personal loan with a co-applicant not only enhances your eligibility but also shares the responsibility of repayment between two individuals. This shared responsibility can provide a sense of security and peace of mind, knowing that you have someone to support you in managing the loan.
Moreover, from a lender’s perspective, having two borrowers reduces the risk of default. In the event that one borrower faces financial difficulties, the other borrower can still contribute to the repayment of the loan. This risk mitigation is one of the reasons why lenders often offer better terms and lower interest rates to joint loan applicants.
Streamlined Application Process with Airtel Finance
Airtel Finance simplifies the process of applying for a personal loan with a co-applicant. With the Airtel Thanks App, you can easily check your loan eligibility, calculate your EMI using the personal loan calculator, and submit your loan application along with the required documents from the comfort of your home.
Airtel Finance offers competitive interest rates and flexible repayment options, making it an attractive choice for individuals seeking a personal loan with a co-applicant. By leveraging the power of a joint application, you can unlock higher loan amounts, better terms, and a smoother borrowing experience.
Summing Up
In conclusion, a co-applicant can play a vital role in enhancing your personal loan eligibility. By combining incomes, improving your credit profile, and sharing the responsibility of repayment, you can increase your chances of securing a loan with favourable terms. When choosing a co-applicant, consider factors such as credit score, income stability, and debt-to-income ratio to maximise the benefits of a joint personal loan application.
With Airtel Finance, applying for a personal loan with a co-applicant is a seamless and convenient process. Take advantage of the power of joint borrowing and unlock the financial support you need to achieve your goals. Visit the Airtel Finance Personal Loan page to learn more and start your loan application journey today.
FAQs
- Who can be a co-applicant for a personal loan?
A co-applicant can be a spouse, parent, sibling, or any other individual with a good credit score and stable income who is willing to share the responsibility of repaying the loan.
- Can a co-applicant help me get a lower interest rate on my personal loan?
Yes, if your co-applicant has a strong credit profile and a stable income, it can improve your overall creditworthiness and potentially help you secure a lower interest rate on your personal loan.
- Is it necessary for the co-applicant to be a family member?
No, it is not mandatory for the co-applicant to be a family member. You can choose any individual as a co-borrower who meets the loan eligibility criteria.
- What documents does a co-applicant need to provide for a personal loan application?
A co-applicant typically needs to provide proof of identity, proof of address, income documents such as salary slips or bank statements, and a signed loan agreement along with the primary applicant.
- Can a co-applicant help me get a higher loan amount?
Yes, when you apply for a personal loan with a co-applicant, lenders consider the combined income of both applicants, which can potentially make you eligible for a higher loan amount compared to applying alone.
