For many newlyweds, the prospect of applying for a loan to complete renovations to a home, buy a new car, or prepare for the arrival of their first child can be appealing. So who applies for the loan? If one half of the relationship has the better credit, it can make for them to apply for the loan. However, when both are in a similar financial situation, a joint loan can be the more appealing option.
At times, it will take one applicant being knocked back before a couple considers applying together. This is never a bad idea, once both are happy enough to do it. You may find that lenders who deal with credit cards, payday loans, and installment loans online actively encourage joint applications. A joint loan can also help both applicants establish equal financial responsibility, and raise their credit rating with time.
What is the process of applying for a joint loan?
It is not so different from applying for a loan in one name, but it can be very beneficial in gaining loan approval. This is because the lender has information pertaining to both you and your partner, which makes the prospect of lending to you both more favorable. Providing the two applicants can provide details confirming that they are both in a position to make installment loan repayments, and demonstrate financial responsibility, that is.
What does a lender require from us?
The information a lender wants to see as proof will differ from institution to institution. There will almost certainly be a requirement for both applicants to provide proof of identification, proof of income, and proof of residency. While traditional lenders also request social security numbers and can potentially request up to two years proof of income, this can also vary.
What are the benefits of joint loans?
There are many benefits to applying for a loan in joint names. The most notable are:
- A significant increase in approval for the loan: If one applicant does not earn enough to be approved on their details alone, then their partner’s details can be influential in ensuring that the loan does go through. This is one of the major attractions of joint loan applications.
- An increase in the amount you wish to borrow: Two heads are better than one, or so they say. By this logic, two applicants will generally be able to secure a higher amount when it comes to securing a loan.
- It can benefit both parties in the long term: If either you are your partner are unable to make loan repayments, then the other can potentially cover your half until you get back on your feet. Should you choose to start a family, then this can also favor both you and your partner, at least in the short term.
While a joint application has many benefits, it may not be everyone. As with most things, it will come to down the individual, or, in this case, two people.