Just getting it out there for all those folks new to the term; a joint loan is that type of loan that is made out to two or more borrowers. Okay, so now that that’s out of the way. Joint loans also come with their own set terms and conditions and all parties ought to adhere to like each of the borrowers of the loan are equally responsible for the loan like repaying it. The borrowers of these joint loans usually have some ownership interests in assets that come with the loan proceeds.
Applying jointly for a loan also increases your chances of getting a loan significantly, but then, things may not always work out at all as planned sometimes with these types of loans.
In most instances, you find that it is the couple who usually go for the joint loans, but what terrifies most is that if one partner fails to meet up to the terms of the loan, then the whole burden has to fall on the other partner to pull the other weight regarding the repayments.
Here are a few facts you may want to know and read about before you dive in to get a joint loan be it with your partner or family or friend.
- What types of debt and loan can you take jointly?
There are several different types of loans or debts that you can take out jointly like:
- Secured loans like mortgages
- Joint bank account loans that have overdraft facilities
- Unsecured loans like the personal loans from banks or other lenders.
- Joint and several other liabilities explained? The top tip
Most of the joint bank account loans are usually set up in that one partner can always withdraw and use funds of the loans without the other partner’s permission. But there are also some accounts where both partners need to be present and agree before any money leaves the joint accounts.
Don’t ever think that you are only liable for half of the loan from joint loans. This is never the case. Immediately you sign the contract for the overdraft or the joint loan, each of you is agreeing to be liable for the loan fully if the other partner fails or decides not to pay.
It usually never matters; who spent the money? Or who spent more? Or who owns the items bought with the money? And it never makes any difference even if you were married when you took the loan and separated afterward, the loan still has to be paid by someone.
- Can credit cards also be taken out jointly?
Yes! In some regions like the United Kingdom, you can take out credit cards jointly. But there is always the main cardholder; the person who signed the official agreement. This means that the main person is the one liable for the joint card loan in full. But there are instances where the main cardholder can also let another person have the credit card and on the same account.
- Can having a joint account increase your chances of getting credit?
Yes! Sometimes it can. But you might want to try and avoid applying altogether in case one of the borrowers has a bad credit rating as the credit files of all of the borrowers is usually linked.