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Joint Loan vs. Co-sign Loan - Comparison & Benefits

Joint Loan vs. Co-Sign Loan - Comparison & Benefits

Updated on February 2, 2023


Most of us strive to put our best foot forward when applying for a personal loan. Even if you are willing and able to pay back a debt, your loan approval largely depends on the lender's requirements and the state where you live. Fortunately, you can take steps to improve your chances of qualifying for a personal loan or any loan.

Out of the many ways to boost your chances of loan approval, both joint and co-signed loans can be an easy option to take advantage of someone else's good credit history to qualify for a loan. This article will go over the differences and similarities between joint and co-sign loans to help you decide which one is the most suitable for your financial needs.

What Does It Mean To Have a Joint Loan?

A joint loan means that two borrowers apply for one loan and jointly share the responsibility of repaying the loan. Both the applicant's income and ability to repay are checked to see if you're together eligible for the loan or not. And if the loan is approved, both borrowers are equally responsible for repayment and have equal access to the funds. A joint loan allows you to borrow the money you need and distribute the cost of your loan with another person, who is called a co-borrower.

Pros and Cons of Joint Loans

When you're one of the borrowers, you should consider knowing the merits and demerits of taking a loan jointly:


  • Chance of receiving a higher loan amount: Adding a co-borrower increases your chance of qualifying for a loan and makes you eligible for a higher loan amount. A lender will consider only your income when you apply alone, whereas, by combining the income of your co-borrower, you can apply for a comparatively bigger loan.
  • Reduce the repayment burden: Since co-borrowers share the cost of repaying a loan, you don't have to bear the cost and responsibility alone. If you lose your job or find it difficult to make payments, the other borrower can help to avoid missing any payments.


  • Risk of co-borrower defaulting: If the co-borrower defaults, you will be responsible for paying the entire outstanding balance on the loan. This could be tough if you have a substantial loan amount and insufficient ability to repay alone.
  • Possible damage to credit score and relationship: If one of you misses a payment, it will negatively impact the credit score of both the applicants. Such situations can also make the relationship turn sour.

What Does It Mean To Co-sign a Loan?

A co-signer loan is a type of loan that uses a co-signer to help you qualify for a loan even when you have a low credit score. The person you ask to be a co-signer should have better credit or a higher income than you. Co-signers have no right to the loan money but are liable to pay off the loan if the primary borrower defaults. Those with a close relationship with you can usually be asked to be a co-signer and take responsibility for repaying a loan, like your parents or a close friend.

Pros and Cons of Adding a Co-signer

The advantages and disadvantages of a co-signed loan have two perspectives: one from the co-signer's point of view and the other from one who uses a co-signer. Here we're going to look at the pros and cons of a co-signed loan if you are the primary borrower:


  • Improves the odds of qualifying: When you find it challenging to meet the loan requirements of your loan lender, applying with a co-signer can help you get approved with a low credit score and help you obtain better loan terms.
  • Don't need to share the loan proceeds:The best thing about using a co-signer is that even if they help you improve your chances of qualifying, you get the entire loan amount upfront and can use the funds for any purpose you like.


  • Further drop in credit score: A co-signer takes a more significant risk if you fail to pay than a co-borrower. You usually use a co-signer when you have a low credit score or income. So if you default, your credit score drops even lower, and you may also reduce your co-signer's ability to borrow.

How Are Joint Loans Different from Co-sign Loans?

Although both joint and co-signed loans help you improve your chances of getting approved for a loan, both work differently. To help you understand a bit more about each of these loan types, we've summarized the differences between joint and co-sign loans below:


Joint Loan

Co-signed Loan

Who can be addedYour spouse, friend, or business partner with a common financial goal could be an ideal co-borrower or co-applicant.A close family member, friend, spouse, or parent can usually be added as a co-signer.
Access to the fundsBoth the primary borrower and the co-borrower have equal access to loan funds. The co-signer has no right to the loan money.
Responsibility for making paymentsBoth the applicants share the responsibility for making payments. The co-signer is not responsible for making payments unless you default.

How Do You Choose a Co-signer or Co-borrower?

It's always best to ask a person you trust and who trusts you to be your co-signer or co-borrower. However, there are other important factors too that you should look for in a co-signer or co-borrower. Let's take a look at some of them below:

Choose a co-signer or co-borrower with an excellent credit score of 700 or higher and a solid financial history. In the case of a joint loan, you also need to have a good payment history to prove your ability to repay the loan.

Since a co-borrower agrees to share the responsibility of repaying the loan and a co-signer, on the other hand, agrees to pay back your loan if you default, they need to have enough steady income.

The amount of debt a person holds also plays a vital role in determining the ability to pay back the loan. Hence, it would help if you preferred a co-signer or co-borrower with a good debt-to-income ratio.

When you add a co-signer or a co-borrower, the lender checks if they can meet the loan requirements or not; therefore, before you approach any of your close relatives, check the lender's essential requirements for qualifying for the loan.

What Does CASH 1 Have To Offer?

Our Loans can prove an excellent option when you cannot decide whether to add someone as a co-borrower or a co-signer. It can help you get up to $50,000 in as little as 15 minutes, and you don't even need an impressive credit score for that. You can start your application to see how much you can borrow or qualify for by filling in a few basic details. However, if you can't repay and still need a loan, you can consider the pros and cons of joint and co-signer loans to make a wise decision.

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Harita Solanki

Harita Solanki is a passionate advocate for personal finance and believes in empowering individuals to take control of their financial lives.

Her expertise covers a wide range of personal finance topics, including budgeting, saving, credit, debt management, and retirement planning.

With over six years of dedicated experience in the finance industry, Harita has helped countless readers of CASH 1 Loans make informed decisions and achieve their financial goals.

As a dedicated writer, Harita has contributed to numerous financial publications, sharing her knowledge and insights to help readers navigate the complexities of personal finance.

Her writing style is approachable, concise, and tailored to the needs of everyday individuals looking to improve their financial well-being.