When should you consider a co-applicant for a Personal Loan?

A financial requirement can come up anytime. It could be a loved one who requires a medical emergency, your child’s wedding expense, or a...
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When should you consider a co-applicant for a Personal Loan?

A financial requirement can come up anytime. It could be a loved one who requires a medical emergency, your child’s wedding expense, or a home renovation requirement that you cannot put off. You should use your savings and investments to meet these unplanned financial requirements. However, this could disturb your long-term financial plan.

So, applying for a Personal Loan is a viable way to meet your financial requirements. You can get a massive Loan amount at a competitive interest rate for your preferred tenure. You can repay the borrowed amount in Equated Monthly Instalments without any hassle. You can apply for a Personal Loan at any leading bank or financial institution. It is best to opt for a bank with simple eligibility criteria, competitive interest rates, and flexible repayment terms.

You can also apply for a Personal Loan with a co-applicant. Here are different instances when applying for a Personal Loan with a co-applicant helps:

Monthly income

The bank considers several factors to determine your Personal Loan eligibility. Your monthly income is the most important determining factor. Your monthly income indicates your repayment capacity. This means a higher monthly income translates into a good repayment capacity, helping you get a significant Loan amount. If you have a low monthly income, apply for a Personal Loan with a co-applicant.

The co-applicant’s monthly income gets added to your total income, boosting your repayment capacity. This way, you get the desired Loan amount.

Credit utilisation ratio

The bank receives the entire credit history when you apply for a Personal Loan. They check the ongoing Loans and Credit Card payments. The credit utilisation ratio is the credit you have used. A higher credit utilisation ratio means you heavily rely on different types of credit for your finances. This breaks your case as a borrower before the bank. The bank may reject the Personal Loan application.

Applying for quick Personal Loans with a co-applicant helps you present a stronger case before the bank. They consider yours and the co-applicant’s credit utilisation ratio for Loan approval, so if you lag with the ratio, the co-applicant makes up for it. When making a co-applicant Personal Loan application, there are two types: primary and secondary. It is best to always have the financially stronger applicant as the primary Loan applicant.

Credit scores

The credit score is a numerical overview of your credit history. A good credit history fetches you higher credit scores and vice versa. The bank considers the score to establish your credibility as a borrower. It impacts your Loan approval, Loan amount offered, and applicable interest rates. If you have a low credit score, consider applying for a Personal Loan with a co-applicant.

Like all the factors, the bank considers your and the co-applicant’s credit score. This boost the chances of Loan approval and offers a competitive interest rate.