Personal loan

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Personal loans have become one of the largest categories of debt in the United States, as they typically carry lower interest rates than credit cards, and there are many ways they can be used.

You can use a personal loan for just about anything, including emergency expenses, home repairs and renovations, weddings, funerals, vacations, and more. (However, if your intention is to use a personal loan for education fees or small business expenses, you will need to check the terms of the lender, as many prohibit the use of personal loans for these purposes.)

Another attraction of personal loans is that lenders usually offer a wide range of loan amounts – you can ask for as little as $ 500 and up to $ 100,000, so there is a lot of flexibility. But if you’re hesitant to take out a large loan, like for a major home renovation or a big wedding, the thought of paying it all off on your own can seem quite daunting. However, this is where a co-applicant may be able to take some of that pressure off.

A co-applicant is someone who applies for the loan with you and is also responsible for repaying the full loan amount. Co-applicants are often also referred to as co-borrowers, and they can usually be added to your personal loan application form.

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However, co-applicants should not be confused with co-signers. A co-signer is someone who can add their name to your application to help you qualify for a loan, but they are not financially obligated to repay the loan unless you can continue to make payments.

Benefits of having a co-applicant

When applying for a personal loan, it’s common for lenders to analyze your credit history, debt ratio, and other information during the process to determine your loan amount, interest rate, and debt. duration of your loan. Applying to a co-applicant who has a higher credit rating than yours can help you get approval for a lower interest rate and other better loan terms.

And because the income of two applicants is taken into account, it could help you get approval for a larger loan. You may be viewed as a less risky borrower if a lender knows that there are two sources of income that can be used to pay off the entire loan.

Additionally, sharing the responsibility for the personal loan can help reduce your chances of missing a payment if you were to lose your source of income, as another person is also required to make the payments. Keep in mind, however, that if payments are missed, it can negatively impact the credit of both people on the loan.

When should you consider getting a co-applicant

Since the co-applicants have the financial responsibility to repay what is borrowed, it makes sense that a co-applicant is someone who will also benefit from the loan. Maybe you and your spouse are finally ready to tackle that home improvement you’ve been putting off for years; in this case, you might consider having your spouse be your co-applicant. Or maybe you need more financing to take your business to the next level? if you have a business partner, that person will also benefit from the money and therefore might be willing to be your co-applicant (as long as the lender allows you to use the loan for this purpose).

It will also be helpful to have a co-applicant in these scenarios if you don’t have enough credit history under your belt to get approved for a lower interest rate. It can also help if you need to withdraw more money but don’t have a stable income.

Additionally, some lenders, like SoFi personal loans, for example, require borrowers to have a co-applicant if they are a non-resident alien or a DACA beneficiary.

Find a personal loan that allows you to have a co-applicant

Not all personal lenders allow you to apply with a co-borrower or co-applicant. But here are a few that offer applicants that option.

SoFi personal loans

SoFi personal loans

  • Annual percentage rate (APR)

    5.99% to 18.85% when you sign up for automatic payment

  • Purpose of the loan

    Debt consolidation / refinancing, home renovation, moving assistance or medical expenses

  • Loan amounts

  • terms

  • Credit needed

  • Original fees

  • Prepayment penalty

  • Late charge

SoFi Personal Loans are not only free, but you can also borrow large sums. Applicants can borrow as little as $ 5,000 and up to $ 100,000, making this personal loan a great option for those who need more cash to cover larger expenses.

You can get financing for your loan the same day or the next business day, provided that you do not need to apply with additional information. And this lender also allows you to apply with a co-applicant.

When you take out a SoFi personal loan, you can join its membership platform to enjoy a host of other benefits such as career advice, financial advice, and more.

LightStream personal loans

LightStream personal loans

  • Annual percentage rate (APR)

    2.49% to 19.99% * when you sign up for automatic payment

  • Purpose of the loan

    Debt Consolidation, Home Renovation, Auto Financing, Medical Expenses, Marriage and Others

  • Loan amounts

  • terms

  • Credit needed

  • Original fees

  • Prepayment penalty

  • Late charge

This lender offers personal loans for just about any purpose except higher education and small business. The interest rate ranges depend on the type of loan you take out.

LightStream does not charge any origination, administration, or prepayment fees, and the repayment terms range from 24 to 144 months. You can add a co-borrower during the application process.

LendingClub Personal loans

LendingClub Personal loans

  • Annual percentage rate (APR)

  • Purpose of the loan

    Debt consolidation, large expenses, emergency expenses, moving, weddings

  • Loan amounts

  • terms

  • Credit needed

  • Original fees

    2% to 6% of the loan amount

  • Prepayment penalty

  • Late charge

    15-day grace period for making payments without penalty

LendingClub doesn’t charge prepayment penalties, which means if you decide to pay off your loan in full before your term ends, you won’t have to pay any fees or penalties. Those looking for smaller loans may qualify for a LendingClub loan, which starts at $ 1,000. The maximum loan amount you can take out is $ 40,000. And like the other two lenders, LendingClub allows you to add a co-applicant when looking for financing.

At the end of the line

A personal loan can be an essential way to get quick financing for large expenses. And while the idea of ​​paying it all off might seem daunting, having a co-applicant take the loan with you can take some of that pressure off.

Of course, not all personal loans allow co-applicants, so you should check before submitting your application. And as always, seek the advice of a financial planner if you’re in doubt about whether a personal loan can help you reach your goals.

The terms of your LightStream loan, including the APR, may differ depending on the purpose of the loan, amount, term, and your credit profile. Excellent credit is required to benefit from the lowest rates. The rate is shown with the AutoPay discount. AutoPay rebate is only available before the loan is funded. Rates without AutoPay are 0.50% higher. Subject to credit approval. Conditions and limitations apply. The advertised rates and conditions are subject to change without notice. Example Payment: Monthly loan payments of $ 10,000 at 3.99% APR with a three-year term would result in 36 monthly payments of $ 295.20.

Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.