Joint Personal Loans for Married Couples

When couples marry, their financial lives become intertwined. Even with two incomes, sometimes couples need extra money for expenses.

Vehicle repairs, home improvements, medical expenses, credit card debt, and moving expenses can quickly add up. For many couples, a personal loan is the ideal solution, but they must determine whether to apply for joint personal loans or individually.

By applying for a joint personal loan, a married couple may qualify for larger loans and better rates than individual applicants. This is often true if the primary applicant has an average or poor credit score.

How Are Joint Loan Applications Unique for Married Couples?

When applying for joint personal loans, much of the actual application process remains the same. What does differ is that credit score, income, and other pertinent financial information (debt to income, etc.) for both parties is utilized. Both sets of information is used to make the loan decisions on rates, terms, and limits.

This process is similar to what is required of personal loans with a co-applicant. But the long-term rights and responsibility with a personal loan to married couples is immediately shared. A co-signer, on the other hand, assumes responsibility for the debt if the original applicant fails to pay it, but they do not have any rights to the funds or property.

Further, a joint personal loan will appear in full on both credit reports, meaning the debt is shared, but not divided. If you and your spouse are up-to-date on bills, this may have little impact on your credit score, or it can even help lift a credit score over time. However, if the debt goes unpaid, both credit scores can suffer the consequence.

The shared debt is legally binding regardless of what happens to the marriage. For example, if the couple files for divorce, the debt will remain in both names. A lack of payment, even if one partner no longer has access to funds or the goods purchased with them, will still impact the credit reports of both parties. Similarly, if one partner files bankruptcy or dies, the other partner remains fully responsible for the debt.

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Should You Apply for a Joint Personal Loan as a Couple?

Whether or not you should apply for a joint personal loan as a couple depends on a variety of factors. Many experts cite the nature and purpose of the loan as a major consideration when evaluating a joint loan application.

For example, if you need a personal loan for home improvements, duel debt refinancing purposes, or vacations then a joint personal loan may make sense, as both parties have a vested interest.

However, for items that will be used solely by one party, then an individual loan or a loan with a cosigner may be a better idea. This is particularly true for personal loans for property that is typically considered to be “owned” by one individual, like a car.

While some lenders don’t offer joint personal loans, many do, including Wells Fargo, LendingClub, and Chase. If you’re considering applying for a joint personal loan, contact the lender to determine what options are available.

Joint Personal Loans: Pros and Cons

One of the biggest drawbacks of getting a joint personal loan is that a default can impact the credit history of both parties. However, there are a few reasons that a joint personal loan can be good choice, including more flexibility, lower interest rates, and easier budgeting options.

In terms of flexibility, the applicants can use the funds in a personal loan as they see fit, which better helps with managing the complexities of household and family finances.

The best personal loans usually have much lower interest rates than credit cards. So, while credit cards can help out in a pinch, they are not an ideal funding option for long-term financial health.

The average credit card interest rate currently hovers just over 17% for those with relatively good credit. Those with average or poor credit may find their APR is closer to 25%. Personal loans, on the other hand, can be in the single digits, particularly if you and/or your spouse have good credit.

Finally, personal loans can be a better option when it comes to budgeting.

When you take out a personal loan, you enter into an agreement with a specific total, payment arrangement, and term. Credit cards, on the other hand, can become unwieldy with accumulating interest.

Since budgeting is often an essential activity when it comes the responsibly managing family finances, joint personal loans may help couples get back on track while mitigating risk.

Bottom Line

When two people marry, they share financial needs. At times, this means identifying ways to meet financial obligations without cash on hand. Joint personal loans can provide a way to fulfill those obligations. Today, several lenders allow married couples to submit joint loan applications online, increasing their chances at obtaining funds. Check with your lender of choice to determine your options.