Learn about Co-borrower personal loans and their Benefits

Learn about Co-borrower personal loans and their Benefits

Who is a co-borrower?  

A co-applicant is also known as a co-borrower. The term co-borrower refers to a person who together applies for personal loans. Co-borrowers are responsible for paying monthly loan payments equal to their individual ownership shares, but their debts are equal to the loan amount agreed upon. They not only share responsibilities but also have full ownership of the money and valuables (such as a car or house) obtained with the loan. 

If you are planning for co-borrower personal loan the loan paperwork includes the names of the primary borrower and the co-borrower. The Lenders who provide the loan consider various factors such as the applicant’s funds and credit history when deciding to provide a loan rather than focusing only on the applicant’s income.  

The applicant with the lowest average credit score is usually used by lenders to decide the lending rates. Personal loans with co-borrowers usually consist of Co-borrower’s credit scores that is influenced by late payments because they are responsible for the loan’s repayment. On the other hand, paying on time would increase the credit scores of both borrowers. 

Benefits of a co-borrower:  

Higher eligibility:

Financial companies like Zap money could consider you as a better candidate for a loan if your co-applicant is secure financially and has a good credit score. When processing the application, both borrowers’ income is considered.  

Increased chances for loan approval:

Lenders may take the co-borrower’s well-being into consideration if they have a co-borrower with an excellent credit score and regular income. This is especially useful if your income or credit score is lower.  

Increased loan amount:

If you have a co-borrower, many companies like Zap Money will approve loan amounts which range from Rs. 1000 to one lakh. Either their ability to repay the loan is considered, which may qualify them for a larger sum of money. 

Flexibility in repayment program:

If you have a co-borrower, your repayment plan may be more flexible. Because of this, both borrowers can use their income to pay back their personal loans 

Risks of a co-borrower: 

 Because of shared ownership, decisions about selling the house or repaying the loans must be agreed upon by the two individuals. Any major alterations needed in the approval of the co-borrowers could limit your freedom of choice.  

Buying a home together is an important financial decision that could cause problems in the partnership with your co-borrower. Various views for making payments or choices about the property may cause arguments and damage the unity of your personal life. 

The Hidden Responsibilities of a Co-Borrower:  

Debt-to-Income Ratio:

The loan amount will be included in developing your debt-to-income ratio (DTI), which may have an impact on your future eligibility, including loans.

The importance of documentation:

Prepare a written agreement for co-borrowing. This should specify commitments, duties, responsibilities, and details of the loan. 

 Ask for Professional Support:

If communication breaks down, never be hesitant to bring in an advocate or financial advisor for professional support. 

Communication is always important; yet not easy: 

Co-borrowing is an excellent tool for reaching goals in finance, but for the process to go easily, you and your co-borrower must communicate regularly and clearly. Great communication can help you and your co-borrower maintain a successful relationship. 

 Early and Open Discussion:

Discuss funds, risk capacity, and repayment times openly and honestly ahead of co-borrowing. Discuss about possible challenges and how they are going to overcome these problems together in the future. 

 Setting Ground Rules:

Explain the limits and ground rules to communicate clearly. This involves the way you like to have the means of communication (texts, emails), as well as the speed at which you expect things to happen. 

Openness and Understanding: Be honest and truthful about the state of your funds, but do not forget to show empathy if your co-borrower finds difficulties or issues in repaying the loan amount in the future. 


1. What is the difference between a co-borrower and a co-signer?  

A co-borrower has the responsibility for the loan and can apply for it based on their income and credit score. A co-signer’s duty to repay the loan only exists if the borrower defaults. 

2. Do I need to plan on finding a co-borrower?  

Depending on the situation, yes. Considering your ability to repay loans, communication choices, and savings goals when considering a co-borrower. Before choosing your option, clearly study the advantages and disadvantages. For personalized guidance, speaking with a financial adviser is also required. 

3. If one of the co-borrowers fails to repay, what happens?  

Each borrower is responsible. Both the co-borrower’s credit scores will be affected by late or missed payments, which will be sent to credit bureaus. 

Hariharan Ravichandran

Understanding the ever-changing environment of money may be a difficult experience.I'm Hariharan, a seasoned finance explorer and blogger. I am right there with you, beginning on this journey of financial enlightenment as a fellow traveler.


The ZapMoney app makes personal finance easy, accessible, and affordable. The App is available on Google Play Store and App Store for download, allowing you to sign up and access easy personal loans. ZapMoney is powered by Monexo Fintech Private Limited which is a registered NBFC-P2P.
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