Should You Apply for a Personal Loan With a Co-Applicant?

Personal loans are a great tool for debt consolidation and financing big purchases. But unfortunately, not everyone can qualify for a personal loan at a reasonable interest rate, as these loans are available only to borrowers with a good credit score.

Fortunately, there is a way for you to qualify for reasonable loan rates: you can apply with a co-applicant who has a stronger credit profile than you.

This guide will explain what a co-applicant is, how getting co-applicant loans work, and the best personal loans available that allow co-applicants.

On this page:

• What is a Co-Applicant?
• Where to Apply for Co-Applicant Loans
  
• Co-Applicant vs Co-Signer: What’s the Difference?
  
• Getting a Personal Loan with a Co-Applicant
  

What is a Co-Applicant?

A co-applicant is someone who applies for a loan with you and who shares legal responsibility for the loan that you’re taking out. Since you are both borrowing together, it usually makes sense for the co-borrower to also be apart of the goal you’re funding. For example, if you and a roommate or partner own a house together and want to borrow to fix it up, you could be co-applicants on a personal loan to pay for home improvements.

Co-applicants will only help you to get approved for a loan with a reasonable interest rate if they have good credit and strong financial credentials. So, ideally, you should look for someone whose credit history and current income check those boxes. Since you and the co-applicant will need to work together to repay the loan, the co-applicant should also be someone who you are close to, such as a friend or family member you’ll be in ongoing contact with as you jointly repay the debt.

If the co-applicant has better credit or a higher income than you, the co-applicant could significantly increase the chances you’ll be approved for a loan, could help you get a lower interest rate, and could help you to be approved to borrow more.

Where to Apply for Co-Applicant Loans

Not all lenders allow you to apply with a co-applicant. Here are six of the best personal loan lenders that do accept joint applicants for financing. We rate our personal loans based on the weighted average of five separate data categories, so you can know you’re getting the best possible service for your situation.

1. LightStream
2. Navy Federal Credit Union
3. DCU
4. FreedomPLUS
5. Mariner Finance
6. SoFi

1) LightStream

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Rates (APR)

5.34% – 16.99%

Loan Terms

2 – 7 years

Loan Amounts

$5,000 – $100,000

LightStream is an online personal loan lender that issues loans to people with excellent credit. LightStream allows loans with co-applicants and some of the key terms to know include the following:

• You can take out a loan to be repaid over two to seven years
• You can borrow between $5,000 and $100,000
• The APR on LightStream loans is 4.44% to 16.99%
• There are no origination fees or prepayment penalties

2) Navy Federal Credit Union

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Rates (APR)

8.19% – 18.00%

Loan Terms

1 – 15 years

Loan Amounts

Not disclosed

Navy Federal Credit Union makes loans available only to credit union members. Co-applicants are permitted to apply jointly for a loan, and loan terms include the following:

• You can take out a loan to be repaid up to 180 months
• The APR on Navy Federal Credit Union loans is 8.19% to 18.0%
• There are no origination fees or prepayment penalties

3) DCU

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Rates (APR)

As low as 8.00%

Loan Terms

1 – 5 years

Loan Amounts

$300 – $25,000

DCU is a new-England based credit union that makes loans to members with good or excellent credit. You can apply with a co-applicant and loan terms include the following:

• You can take out a loan to be repaid up to 60 months
• You can borrow between $300 and $25,000
• The APR on DCU loans can be as low as 8.00%
• There are no origination fees or prepayment penalties.

4) FreedomPLUS

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Rates (APR)

5.99% – 29.99%

Loan Terms

2 – 5 years

Loan Amounts

$7,000 – $35,000

FreedomPlus is a unique lender that takes a more personalized approach to loan approval. Each borrower meets with a loan consultant via phone to find the right source of funding and determine if the borrower can meet qualifying requirements. Applying with a co-applicant is possible and loan terms include the following:

• You can take out a loan to be repaid over two to five years
• You can borrow between $7,000 and $40,000
• The APR on FreedomPlus loans is 5.99% to 29.99%.
• There are no prepayment penalties but there is a variable origination fee, which is factored into the APRs above

5) Mariner Finance

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Rates (APR)

Not disclosed

Loan Terms

Not disclosed

Loan Amounts

$1,000 – $25,000

Mariner Finance is an online lender that provides loans even to borrowers with imperfect credit. Some of the key terms to know about Mariner Finance loans include the following:

• You can borrow between $1,000 and $25,000
• There is no prepayment penalty and origination fees vary by state

6) SoFi

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Rates (APR)

5.74% – 16.99%

Loan Terms

2 – 7 years

Loan Amounts

$5,000 – $100,000

SoFi is a popular online lender that caters to people with good credit and solid income. SoFi allows joint loans with co-applicants and some key terms to know about personal loans from SoFi include the following:

• You can take out a loan to be repaid over two to seven years
• You can borrow between $5,000 and $100,000
• The APR on loans from SoFi is 5.990% to 16.740%
• There is no prepayment penalty and no origination fees

Co-Applicant vs Co-Signer: What’s the Difference?

Co-applicants and co-signers both make it easier for you to get approved for a loan, especially if your credit isn’t perfect or your other financial credentials are lacking. But loan co-signers and co-applicants have different roles to play, and they sign on to loans for different purposes.

When you get a personal loan with a co-signer, the co-signer is solely signing on to the loan to help with the approval process. The primary borrower is the one who needs to borrow the money and who, in most circumstances, is responsible for repaying the amount borrowed.

When you get a personal loan with a co-applicant, on the other hand, the co-applicant is taking on the debt with you. Generally, you will both want to borrow the money and will work together for repayment. The co-applicant is not signing on solely to help get loan approval but is instead eager to borrow jointly for his or her own purposes.

Getting a Personal Loan with a Co-Applicant

When you are deciding whether to get a personal loan with a co-applicant, there are some key things that you should think about before you move forward. Considerations include:

• How you can prove your reliability when asking someone to co-apply: Mixing personal finance with relationships can be messy. You’ll want to be sure the co-applicant trusts that you’ll be helpful in working to repay the loan. This can be especially important if you don’t have great credit.
• Your relationship to the co-applicant: You’ll share responsibility for repaying the loan, which could take several years. You want to be sure the co-applicant is someone you will still be in contact with throughout the loan repayment process and that you can work well together. You also don’t want the loan to add undue stress to your relationship if one of you defaults on the loan or makes a late payment.
• The co-applicant’s credit and finances: If the co-applicant has bad credit or a lot of existing debt from credit cards or other loans, then they may be a detriment to your loan application instead of helping you get approved.

The Benefits of Co-Applicant Loans

Some of the benefits to applying for a loan with a co-applicant include the following:

• If a co-applicant has better credit than you, they can help you get approved.
• You share responsibility for loan repayment, so if you’re borrowing for a project that benefits both of you, they’ll be legally obligated to uphold their side of the monthly payments.
• Combining your credit and income could help you get approved for a larger loan

The Downsides of Co-Applicant Loans

There are also some downsides to applying for a loan with a co-applicant, including the following:

• Your chances of loan approval could be hurt if the co-applicant doesn’t have credit as good as yours or if the co-applicant already owes a lot
• You could become responsible for the full loan amount if something happens and the co-applicant can’t keep up with their required loan payments
• Borrowing money with someone can strain your relationship

How to Apply for a Co-Applicant Personal Loan

Applying for a personal loan with a co-applicant follows basically the same application process as applying for a personal loan on your own—except you provide the personal information of both borrowers instead of one. Typically, you will need to provide details including:

• Your names, addresses, and Social Security numbers
• Your income
• Your outstanding debts

You may be asked to provide documentation, such as pay stubs, bank account statements, or tax returns, to verify your debt-to-income ratio, employment, and outstanding debts. And lenders will check the credit score and credit report of both applicants when deciding whether to make the loan.

Bottom Line: Should You Apply for a Personal Loan with a Co-Applicant?

Applying for a personal loan with a co-applicant makes a lot of sense if you and someone else you trust—with good credit—want to borrow together for a joint goal. Just be sure you understand that you’re both responsible for loan repayment and you discuss together how the loan will be paid off over time.