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What is a joint loan?

A joint loan – or shared loan – allows you to borrow money with another person you trust, such as a partner, relative or close friend.

How do joint loans work?

A joint loan can help pay for large purchases, such as a new car, or cover the costs of home improvements. Together, you may be able to borrow more money than you could by yourself. But taking out a joint loan requires careful thought – you’ll be responsible for paying it back in full, not just your half. 

What types of loans can be joint?

Different types of loans and debt can be taken out jointly. These include secured loans, such as a mortgage, and unsecured loans, such as a personal loan. You can also open a joint bank account with an arranged overdraft. 

Credit cards can’t be taken out jointly. There is a main cardholder who is responsible for paying off the credit card. You can add an additional cardholder to use the credit, but they won’t be legally responsible for making payments.  

Explore: Secured vs unsecured loans explained 

Things to consider

Here are some of the key things to consider before taking out a joint loan:

You’ll need to meet your monthly loan repayments

It’s important you can afford to repay the loan each month, even if your financial situation were to change, and factor this into your budget

Missed loan repayments can affect your credit score, and your ability to borrow in the future. Your home could also be repossessed if you’re unable to meet your mortgage repayments. 

You’ll be responsible for paying back the loan in full

You’ll be responsible for paying back the total amount of the loan, not just your half. So if one partner decides not to pay, or can’t pay, the other will need to ensure the repayments are still met. Even if your partner spent the money, or owns the item(s) purchased using the loan, you’re both still responsible. 

Loan repayments still need to be made after a separation

A relationship breakdown can be difficult and may affect your finances. Repayments on any joint loans, including mortgages, still need to be made after a separation, but it’s worth letting your bank know if you’ve separated. 

A partner’s poor credit history can affect yours

When you have a joint loan, or joint debt with someone, your credit history will be linked to theirs. This means if you decide to borrow money in the future, in your own name, the lender can take into account the other person’s credit history as well as your own. 

It’s a good idea to check your credit report before you apply, and ask your partner to do the same. 

There may be fees and charges

Before taking out a joint loan, make sure you are both aware of the terms and conditions of the loan, including any fees and charges. 

How to apply for a joint loan

Many lenders allow you to apply online or through an app. As it’s a joint loan, both you and your partner will need to supply the relevant details and documentation. 

Before you submit the application, make sure everything is completely accurate, including the details in your credit report. And only apply if you feel comfortable taking out a joint loan with your partner.