Does it matter who the Personal Loan co-applicant is?

When you check the literal meaning of a bank, it shows it is a financial institution that accepts deposits and provides credit. No doubt, innumerable individuals turn to banks to securely deposit their money. However, twice as many individuals rely on the bank to avail of credit. Almost all banks provide credit in two primary ways: Credit Cards and Loans. Consider your requirement to get a suitable credit.

Say you have a financial requirement. Applying for a Personal Loan is a viable option to meet it. It lets you borrow a lump sum at a competitive interest rate for the chosen tenure. Its repayment is structured in Equated Monthly Installments, letting you meet your requirements without straining your budget.

You can apply for a Personal Loan individually or with a co-applicant. Let us understand who a co-applicant is and how they matter.

Who is a co-applicant?

A co-applicant is an individual who applies for a Personal Loan with you. The bank considers their eligibility as much as it considers yours to decide on the Personal Loan approval. This means that having a co-applicant can boost your overall Loan eligibility, improving your chances of approval.

Since the bank considers the combined eligibility, you may be eligible for a higher Loan amount and better repayment terms. Furthermore, the responsibility of the Loan repayment is equally distributed between you and the co-applicant, which makes the Loan repayment affordable. Simply put, applying for a Personal Loan with a co-applicant can be advantageous in many ways.

However, note that though having a co-applicant is beneficial, you also incur the liabilities associated with their irregular/ default repayments during the Loan tenure. This could cost you dearly. So, be mindful.

How does the co-applicant matter?

Yes, it greatly matters of who the co-applicant is. As mentioned, the bank considers the co-applicant’s eligibility along with yours to decide on the Personal Loan approval and to extend a suitable offer. Hence, it is better that you have a co-applicant who can add value to the overall eligibility. Ideally, you should have someone who ticks the following boxes as your Personal Loan co-applicant:

Credit scores have the power to make or break the Loan eligibility. Therefore, consider getting someone with a credit score of 750 points or plus as your co-applicant. The credit score makes a convincing case before the bank. This helps you get a reasonable Loan amount at a competitive Personal Loan interest rate and flexible repayment terms.
You should opt for an individual having a steady income of at least Rs.20,000. Anything above it is a plus and works in the favour of your Loan eligibility.