What is a joint loan?
Taking out a joint loan with another person could help you pay for a major purchase you’ll share together. For example, you might use a joint loan for:
A destination wedding
A new car
Renovations to your home.
Joint loans work in much the same way as individual loans. You’ll need to pay back the money you borrow, plus interest, in monthly instalments over a set period.
The difference with a joint loan is that you’re both responsible for all of the debt – not just half each or a pre-agreed share. This is called ‘joint and several liability’.
You can’t compare joint loans with Compare the Market.
How do joint personal loans work?
1. Make a joint application
Once you’ve agreed how much you want to borrow, use our loan calculator to see how different loan terms and interest rates could affect your monthly repayments and the total amount you’ll pay back overall.
When you apply, you’ll both need to pass a credit check. The lender will look at how you’ve both handled debt in the past and check your current credit utilisation rate. This shows how much of your available credit you’re using.
It’ll also examine your regular outgoings and expenses to assess if you can afford the monthly loan repayments.
2. Wait for the money, then use it
If your loan application is approved, you should receive the money quickly – it could be in your nominated bank account within 48 hours.
Read our guide to find out what to do if your joint loan application is refused.
3. Repay your joint loan
You’ll pay back your joint loan in fixed monthly instalments. It’s a good idea to set up a direct debit to avoid missing any payments, which could incur charges and harm your credit score.
To avoid any conflict between you and the person you're borrowing with, agree how you’ll manage the repayments before taking out a loan. For example, you could both set up a monthly direct debit into a joint account that the repayments will come out from.
In the UK, you can pay off a joint personal loan early, but bear in mind that early repayment charges may apply.
Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.
What types of loans can I make a joint application for?
Joint secured loans
When you take out a joint secured loan, sometimes known as a homeowner loan, you use a shared asset such as your home as security. It could mean you’re able to borrow greater sums at lower interest rates, because your property reduces the risk for the lender.
But with this type of loan, the downside is a greater risk for you. If you don’t keep up with repayments, your home could be repossessed.
Joint unsecured loans
A joint unsecured loan allows you to borrow money without using an asset as security. When you apply, the lender will look at both of your financial circumstances and credit histories to decide whether to approve your application.
Unsecured loans are normally for smaller amounts. You can typically borrow between £1,000 and £25,000, although Compare the Market looks at unsecured loans up to £50,000.
Interest rates are typically higher than for a secured loan.
Joint current accounts
A joint bank account could provide a borrowing option if it has an arranged overdraft. This should be seen only as a short-term safety net, though, giving you cash to cover an unforeseen expense or emergency if there isn’t enough money in your account.
Joint mortgages
Mortgages are one of the most common types of joint borrowing in the UK.
Since buying a home is the biggest purchase most of us make, we typically need to borrow a decent chunk of the price to make it happen.
Joint mortgages aren’t just for couples, though. If you’re struggling to get on the property ladder, teaming up with a relative or friend could help make a loan more affordable. Or it may be a worthwhile option if you’re looking at a joint investment for a buy-to-let.
Joint car finance
Asking a partner or family member to make a joint application with you for a car loan or car finance could increase your chances of being accepted, since you’re combining your incomes and creditworthiness.
Keep in mind, though, that some lenders may require that both loan applicants live at the same address.
Did you know?
Joint credit cards don’t exist in the UK. If you want to share a credit card with someone, you’ll need to first take out a card in your name, then add them as an additional cardholder. They’ll be able to spend up to your credit limit using their card, but you’ll be responsible for the debt.
What do we need to apply for a joint loan?
When you apply for a joint loan, you’ll both be asked to provide details including:
Your address history for the past three years
Your job status, salary and details of any other income
Your financial dependants (if any)
Your outgoings and expenses, including rent or mortgage payments.
Are we eligible for a joint loan?
Eligibility will vary between lenders but, normally, you’ll both need – as a minimum – to:
Be at least 18 years old or, in some, cases 21. There may also be upper age limits
Be UK residents with full rights to live in the UK
Hold a UK current account.
Who can I get a joint loan with?
As long as you’re both eligible, you can get a joint loan with whoever you want. It could be your partner, a parent or sibling, or friend, for example.
But creating a financial link with somebody is a big step – you need to make sure you can trust the person on the application with you. Remember that a joint loan leaves both of you legally liable for all of the debt, even if one of you can no longer afford to repay it.
Are there joint loans for bad credit?
You may be able to find a joint bad credit loan if one or both of you has a poor credit history, but there are likely to be fewer options available. You’ll typically be charged a higher rate of interest and there could be restrictions on how much you can borrow and for how long.
It’s important to note that, if you have a poor credit score, applying for a joint loan with someone with good credit could boost your chances of being accepted.
Similarly, if you have a healthy credit score but apply for a joint loan with somebody whose credit history is poor, it could harm your chances of credit in the future.
What should I consider when taking out a joint loan?
Taking out a joint loan should not be a decision you take lightly. Here’s a rundown of the pros and cons:
What are the advantages of a joint loan?
You may be able to borrow more. With two incomes on the application, you might be able to borrow a larger amount. But remember the golden rule – only borrow what you need and pay back the loan as soon as you can
You could have a better chance of being accepted. If you have a poor credit score or a low income, applying with someone who has a high income and healthy credit score could mean you have a better chance of being approved for a loan.
You could rely on each other to pick up the financial slack. If one of you has a tough month, you could ask the other to cover repayments until you’re back on your feet.
What are the disadvantages of a joint loan?
It could damage your credit score. Being financially linked to someone with a poor credit history could affect your own chances of borrowing in the future.
You may get a poor deal. If you apply for a loan with someone who has a low credit score, you may be charged a higher rate of interest than if you applied on your own.
You could end up liable for the entire debt. In a worst-case scenario that sees your loan partner refuse to contribute, you’ll be responsible for repaying the whole debt.
What happens to a joint loan if we split up or my partner dies?
If you take out a joint loan with a partner and the relationship breaks down, you’ll both still be responsible for the debt. This doesn’t mean you owe only half the money. The lender can ask you to repay the full amount if it can’t get it from your partner.
In the case of a separation, you should ideally aim to reach an amicable agreement to meet your financial commitments and pay off the joint debt. You can then apply for a ‘notice of disassociation’ from the three main credit reference agencies, to remove your financial ties to one another.
In the event that your partner dies and the money left in their estate doesn’t cover their share of the debt, you’ll be responsible for the entire debt.
If you're struggling with debt, help is available. For free debt advice in your area, check out MoneyHelper’s free debt advice locator tool.
FAQs
Is it easier to get a joint loan than apply on your own?
It could be easier to get a joint loan, particularly if you have a poor credit history and you’re applying with someone who has a good credit score or high income. With two incomes to rely on, there’s less perceived risk to the lender of their loan not being repaid.
But, ultimately, whether you’re successful depends on the loan you’re applying for and the financial circumstances of both you and your loan partner.
Compare the Market’s Editorial Team is made up of industry experts with decades of experience in personal finance, insurance and utilities. Each of our authors has an area of expertise, where they can share their extensive experience to help you get a better deal, by finding the right product and saving money.
Our content is written by a Compare the Market expert, backed by data and enhanced by AI. Find out how we ensure accuracy and quality in our Editorial Guidelines.
