Why You Should Trust Us

Investopedia gathered and evaluated hundreds of data points from over 50 companies over three months to pinpoint the key factors that 🧸matter most to readers when selecting a co-signed or co-borrower loan.

This analysis allowed us to review each company based on fees, repayment terms, income requirements, and additional features. We aim to provide thorough and impartial reviews to help readers make informed decisions that suit their needs. Since its launch in 1999, Investopedia has been guiding readers, and since 2020, we’ve been focused on helping them find the best co-signer or co-borrower loan options.

How Does a Persoꦚnal Loan With a Co-Signer or Co-Borrowe🧸r Work?

A personal loan with a co-signer or co-borrower works much like any other 澳洲幸运5开奖号码历史查询:personal loan, but the process is slightly more complex. Lenders consider the 澳洲幸运5开奖号码历史查询:creditworthiness of both applicants, which can improve the likelihood of lower rates and a larger loan. If co-borrowing, both a👍pplicants also have equal access to the funds and equal responsibility in repaying the loan.

The loan itself generally is unsecured, repaid in installments, and can be used for most any purpose. This means once you receive the balance of the loan, you'll pay it back, with interest, in installments over a predetermined period of time.

When applying for the loan, both applicants should be prepared to show proof of income and identification, including social security numbers. For proof of income, you can use copies of pay stubs. The lender will use your social security number to run a 澳洲幸运5开奖号码历史查询:credit check. You'll also need to provide bank account in🎃formati🌠on where loan funds can be deposited. Origination fees and your interest rate are negotiable, and the better your credit, the more leverage you'll have.

When repaying the loan you sometimes can receive a discounted rate if you agree to have monthly payments 澳洲幸运5开奖号码历史查询:automatically debited from your account. This also can help prevent late payment🏅s and the additional fees that go with them.

Common Personal Loan Terms to Understand

If y🐠ou and a co-applicant are shopping for a personღal loan, it is important to be familiar with these key terms:

• Annual percentage rate (APR): The APR for a personal loan calculates the percentage of the principal you'll be charged in interest and certain fees each year. It is calculated by multiplying the 澳洲幸运5开奖号码历史查询:periodic interest rate by the number of periods (monthly in most cases) in a year. The calculation does not include compounding interest but may contain some fees associated with the loan.
• Credit score: A 澳洲幸运5开奖号码历史查询:credit score is based on your credit history and is one way lenders measure your creditworthiness. The most common score is the FICO score, which ranges from 300 to 850. Scores of 740 to 799 are considered 澳洲幸运5开奖号码历史查询:very good, and scores of 800 or better are considered exceptional. Higher scores generally lead to better rates, but standards may vary among lenders.
• Credit history: Your 澳洲幸运5开奖号码历史查询:credit history makes up the details of your 澳洲幸运5开奖号码历史查询:credit report, and that information is used to calculate your credit score. Information in your credit history will include previous accounts you've held, payment histories, and more. Both applicants' credit histories will be reviewed and taken into consideration.
• Origination fee: Lenders sometimes charge an 澳洲幸运5开奖号码历史查询:origination fee to cover the cost of processing the loan application. The fee constitutes a percentage of the total loan amount.

Pros & Cons o🐼f Personal Loans With a Co-Signer or Co-Borrower

Pros Explained

• Better terms: A co-applicant with better credit and additional income could potentially lead to a better rates and lower fees.
  
• Potential for larger loan: Just like a co-applicant can help you qualify for a better rate, it can help you qualify for a larger loan.
• Two incomes contributing to repayment: Two people making payments on the loan can ease the monthly burden and lessen the impact if one person's income later decreased.

Cons Explained

• Potential for conflict: Applicants could have disagreements on how to spend the funds from the loan or how to repay the balance, and this can lead to ugly disputes.
• More time-consuming application: The application process can be more involved and take more time with two people taking part.

Co-Signer Vs. Co-Borrower

It's important to understand that these terms are not interchangeable. 澳洲幸运5开奖号码历史查询:Co-applicants (or co-borrowers after approval) share equally in access to the funds and resཧponsibility for repayment. This is common for married couples who share their finances.

A co-signer, though, is typically used solely to help improve the primary applicant's chances for approval, better terms, or a larger loan. The co-signer usually does not have access to the funds but is responsible for repayment if the primary applicant will not or cannot make payments.

How to Get a Personal Loan With a Co-Signer or Co-🅰Borrower🎀

A personal loan is a significant responsibility for everyone on the application, so it's important to follow some 澳洲幸运5开奖号码历史查询:key steps and make some decisions:

1. Co-signer vs. co-borrower: These are not the same thing, so be sure to understand each applicant's role on the loan. Co-borrowers, or co-applicants, have equal rights and responsibilities. A co-signer, however, does not have equal access to the funds despite having responsibility for repaying the loan if the primary applicant defaults.
2. Decide how funds will be spent: It is important that everyone agrees on how the funds will be used, especially in cases with more than one applicant. It may be a good idea to write down how and when funds will be spent and who will be responsible for doing so.
3. Review both applicants' credit: Co-applicants each should review individual credit reports to see if there are any potential red flags that need to be addressed before applying. Both applicants should share key details with each other to avoid any surprises. Borrowers with poor credit tend to face higher interest rates or 澳洲幸运5开奖号码历史查询:be denied loans.
4. Review income: A lender will likely look at your application more favorably than if both applicants have reliable income. If only one of you has reliable income, it might be worth checking if you can get better terms with just a single applicant.
5. Decide what's most important: There's more than one factor involved with a personal loan. In addition to the borrowed funds, there are the APR, fees, repayment terms, discounts, and more. If a longer repayment term is most important to you, that might mean settling for a higher APR. If the lowest APR is more important, you might have to compromise in other areas. Pin down your top priorities before you do your shopping.
6. Shop around: After deciding on what's most important for your 澳洲幸运5开奖号码历史查询:personal loan, start reviewing lenders. Research banks, credit unions, and other lenders to compare interest rates and other lending terms, in addition to each institution’s customer service reviews and overall reputation.
7. Submit your application: You can apply online or in person at a bank or credit union branch. Either way, be prepared to supply personal information about each applicant and provide any required documents.

Methodology

Investo💦pedia’s rankings of the best personal loans result from in-depth research across 59 lenders.

We analyzed over 2,600 data points from traditional banks, credit unions, fintechs, and finance companies to assess and rank these providers. Our evaluation covered 45 key criteria, including APRs, loan amounts, length of loan terms, origination and late fees, custome♊r experience, and more. This research was conducted between July 23 and October 18, 2024.

Investopedia grouped these criteria into four main categories, prioritizing 26 factors (involving over 1,500 data points) while using the remaining ones for ad♔ditional context and depth. Each criterion was carefully scored and weighted to create a star rating for every l🎐ender. The categories and their weightings are as follows:

• Loan Costs: 30.00%
• Borrowing Requirements: 24.00%
• Lender Features: 24.00%
• Loan Terms: 22.00% 

Check out 澳洲幸运5开奖号码历史查询:our complete methodology f𒀰or a detailed explanation of how we evaluate personal loans.