Best Personal Loans With a Co-Signer or Co-Borrower for 2024

The Bottom Line

Our top pick for a personal loan with a co-applicant is SoFi. SoFi offers a totally fee-free loan experience and provides various rate discounts to keep borrowing costs in check. It also checks the box for large loan needs, offering up to $100,000.

Keep in mind that not all lenders allow co-signers or co-applicants as you compare personal loans. But reputable lenders like Patelco Credit Union offer both co-signer and co-applicant options while Navy Federal has longer repayment options, which can make your loan more affordable.

Understanding Borrower Risk and Credit Terms

The relationship between borrower risk and credit terms is fundamental in the lending industry and has a significant impact on how lenders structure loans. Borrower risk is the likelihood that you as the borrower may default on your loan. Lenders assess borrower risk in a couple of different ways and choose to loan funds across a spectrum that ranges from high borrower risk to low borrower risk.

• Higher borrower risk = Stricter credit terms: When a borrower is perceived as a higher risk, lenders often respond by imposing stricter credit terms. This may include higher interest rates to compensate for the increased likelihood of default. Stricter credit terms may also involve lower loan amounts, shorter repayment periods, or additional fees and collateral requirements to mitigate potential losses.
• Lower borrower risk = More favorable credit terms: If you’re deemed a lower risk, lenders may offer more favorable credit terms. This can include lower interest rates, higher loan amounts, and longer repayment periods. Lower-risk borrowers are often viewed as more reliable, so it’s in a borrower’s best interest to minimize their risk profile (which can be done by securing a co-signer or co-borrower). 
  

Guide to Choosing the Best Personal Loans With a Co-Signer or Co-Borrower

Co-Signers vs. Co-Borrowers

If you have bad credit or a limited credit history, applying for a personal loan with a co-signer or co-borrower can help you access cash you may not qualify for on your own. A co-signer is someone who agrees to be responsible for a loan, but who doesn’t have access to the funds. For example, a parent may agree to co-sign your loan to help you get a low APR, but the money will be delivered to you, the borrower.

A co-borrower, on the other hand, is a joint borrower and has equal access to the loan proceeds. For example, a married couple could apply for a loan together and split the funds and the repayment responsibility. In both cases, the lender will review both applicants’ credit and income information when making a decision.

Co-signing comes with risks, but if you’ve decided it’s your best option, be aware that not all personal lenders allow co-signed applications. Some allow co-applicants, which can still benefit you if you can’t qualify on your own.

Should You Apply For a Personal Loan With a Co-Signer or Co-Borrower?

Whether it's a good idea to get a personal loan with a co-signer or co-borrower depends on a couple of things. Your financial situation, relationship with your co-signer or co-borrower, and ability to manage shared financial responsibilities all factor into the decision. Here's some things to decide regarding whether it's a good idea or not.

When Personal Loans with Co-Signer or Co-Borrower Might Be a Good Idea

• If you have a limited credit history or a lower credit score, having a co-signer or co-borrower with a stronger credit profile can increase your chances of approval and secure more favorable loan terms. In some cases, you may not even be considered for the loan if you have little or poor credit history.
• Co-signers or co-borrowers can boost the amount you're able to borrower. It might be a good idea to get a co-signer or co-borrower if you need access to a larger loan amount that you may not able to qualify for on your own.
• Co-signing or co-borrowing can be advantageous when you and your co-signer or co-borrower share common financial goals. Think about a newlywed couple that want to grow old together a home they own together.
• Co-signed or co-borrowed loans can help build or improve someone's credit history. It may make sense to get a loan with a co-signer or co-borrower if you want to help someone with little to no credit help build their credit score.

When Personal Loans with Co-Signer or Co-Borrower Might Not Be a Good Idea

• On one hand, you may need a personal loan with a co-signer or co-borrower for essentials. On the other hand, if either you or your co-signer/borrower are already facing financial challenges, taking on a joint loan may exacerbate the situation. Everyone's financial situation is different, and you should evaluate whether your financial health makes it a poor time to get a loan with a partner.
• There's an important non-financial angle to co-signers and co-borrowers. This type of loan can strain relationships, especially if there are disagreements about financial decisions or if one party is unable to meet their financial responsibilities. If your relationship with the person is too important to jeopardize, consider whether this type of loan is best for you.
• On the other hand, some people simply want financial independence. A personal loan with a co-signer or co-borrower may not be a good idea as it may not align with your financial ideologies.
• Last, think through how important your credit score is to you and whether you're willing to risk negative impacts due to default (in the case of loans with co-borrowers). With co-borrower loans, it may not be the type of loan you're looking for if you're just not comfortable with your credit score being impacted if someone else technically defaults on the payment.
  

Reasons To Secure Loan With Co-Signer or Co-Borrower

There are a lot of reasons why co-borrowing or co-signing may make sense for you. Some of the more common reasons people take out these types of loans is to:

• Increase borrowing capacity: One of the primary reasons individuals opt for co-signed loans is to increase their borrowing capacity. Having a co-signer with a strong credit history can increase the likelihood of your loan getting approved or getting approved for a higher amount.
• Improve interest rate: Co-signers with excellent credit can help you get a lower interest rate on loans. This benefit not only reduces the overall cost of borrowing but also makes your monthly payments more manageable.
• Build a credit history: Those who are new to the world of credit may find it challenging to establish a credit history. Co-signing provides an opportunity for those individuals, especially students or young adults, to kickstart their credit journey with the support of someone with an established credit profile.
• Share financial goals: Co-signed loans are often pursued by individuals with shared financial goals such as couples looking to buy a home together. This collaborative approach means both parties can contribute to the loan and work towards the same shared, common financial objective.
• Meet eligibility criteria: Some lenders impose strict eligibility criteria for certain loans. A co-signer can help borrowers meet these criteria; otherwise, these borrowers may not be eligible to even apply for the loan.
  

Comparing Personal Loans With a Co-Signer

Before formally applying for a personal loan with your co-signer, it’s a good idea to pre-qualify with a few lenders and research their offerings. When shopping for personal loans, the top cost borrowers consider is the APR. Adding a co-signer to a loan can lower that cost.

As you are comparing your options, pay attention to:

• APR: In most cases, it makes sense to choose the lender with the lowest APR, but be sure to put that in context with additional factors.
• Fees: Lenders charge different origination, late payment, and prepayment fees. 
• Loan amounts: Only borrow what you need. Choose a lender that offers the right loan amount. 
• Terms: Make sure the lender offers a long enough term that you’ll be able to afford the monthly payments. The longer your repayment period, the more you will ultimately pay in interest and in total loan cost.
• Funding time: If you need cash quickly, narrow down your choices to lenders with same or next-day funding. Be sure to ask how applying with a co-signer might impact the timing.
• Ease of application: Estimate how easy it will be for you and your co-signer to complete the application online. 
• Customer service: Look for a lender with a positive track record of customer service, and make sure their customer service team operates at a time that is convenient for you. 

Most Borrowers Rate APR as the Most Important Cost

According to Investopedia's 2023 Personal Loan Borrower Survey, APR is the most important cost to consider when choosing a personal loan

How to Qualify For and Apply For a Personal Loan With a Co-Signer

Lenders often review different factors before approving anyone for a loan. Keep in mind that some lenders may weigh certain criteria heavier than others. Here are a few of the most common things that lenders consider from potential borrowers:

• Your age: Lenders cannot discriminate based on age. However, some states require that borrowers meet minimum age requirements before they can enter a legal financial contract with a financial lender.
• Legal residency: Just like age, lenders can't turn you down because of your national origin. They may ask you about your residency status to determine whether you can pay back the loan. Keep in mind that non-residents and non-citizens may still qualify, but it may be tougher to be approved.
• Income: Almost all lenders ask you for your income and employment information. This is to ensure that your source of income is enough to repay the loan. Some companies may have an income threshold before you can borrow.
• Debt-to-income (DTI) ratio: This ratio represents how much of your income goes to pay off your debts every month. As such, it helps lenders see how much of a risk you are if they approve you for a loan.
• Credit history and score: The majority of lenders use your credit history and credit score to qualify you for a loan. Although these factors don't make or break the decision, they may also influence your loan terms, amount, and interest rate.

If everything looks good and you meet the eligibility criteria,

• Pre-qualify: The first step in applying begins with a rate check with prospective lenders. You’ll need to share your contact info and Social Security number, as will your co-signer.
• Compare loan offers: For lenders you pre-qualify with, compare the rates and terms offered and select the best option for your needs. 
• Formally apply: Submit income and employment information for you and your co-signer for the lender to review.
• Accept and sign: Once the lender gives you a decision, read the fine print and sign your loan documents. 
• Receive the funds: You should receive the funds in your bank account in a few days or, with some lenders, within 24 hours. 
• Repay: Manage your loan from your account on the lender’s online portal. Once your monthly payments are built into your budget, set up automatic payments so you don’t miss one. 

Common Types of Loans With Co-Signer or Co-Borrower

This article is all about personal loans with co-signers or co-borrowers. However, other types of loans usually allow you to have a co-signer or co-borrower.

• Mortgages: Home loans or mortgages often allow co-borrowers, meaning multiple individuals to share the financial responsibilities and benefits of homeownership.
• Auto loans: Co-borrowers or co-signers are allowed to assist in obtaining auto loans, helping secure financing for the purchase of a vehicle.
• Student loans: Co-signers are common in student loans, especially for students with limited credit history or income. Parents often co-sign on behalf of their children.
• Business loans: Entrepreneurs seeking business loans may involve co-borrowers or co-signers to strengthen their loan application, especially in the startup phase where the new company itself has little to no credit history. 
• Medical loans: Co-signers may be involved in medical loans, helping individuals cover healthcare expenses that may not be fully covered by insurance.
• Emergency loans: Loans designed for emergencies may involve co-borrowers or co-signers to expedite the application process and make the borrower’s criteria unquestionably acceptable to a lender for quick underwriting.

How Can You Use a Co-Signed or Co-Borrowed Personal Loan?

In most cases, lenders don't place restrictions on how you can use money from a personal loan. As long as you quality for the loan, you can spend it as you see fit (with some considerations like the fact that you usually can't do anything illegal with it, for example).

Personal loans are typically unsecured loans. This means they're not tied to a specific asset like a car or a house. This lack of collateral gives borrowers more flexibility in how they use the loan proceeds, though it may make it harder or more expensive to secure the loan. Borrowers commonly use personal loans for various things such as debt consolidation, home improvements, medical bills, or other personal needs.

It is pretty important to carefully review the terms and conditions of the your personal loan agreement. While many lenders give a lot of flexibility, some may include specific restrictions in the loan terms. For example, certain lenders might explicitly state that the co-signed or co-borrowed loan cannot be used for business.

Also, keep in mind that lenders may be able to give better loan terms with a secured loan. For example, a car loan with the loan secured by the car may have more favorable terms than an unsecured personal loan with a co-signer or co-borrower.

Alternatives to a Personal Loan With a Co-Signer or Co-Borrower

If you ultimately decide that applying with a co-signer isn’t the best option for you, there are other potential ways to get funding, depending on your needs and financial situation.

• A secured loan: By offering some form of collateral, you reduce the lender’s risk and may be able to qualify for a competitive rate.
• Home equity loan or line of credit: If you are a homeowner and have ample home equity, you could explore borrowing against your home equity. You will still have to meet certain credit and income requirements.
• A balance transfer credit card: If your main goal is to consolidate debt and you have decent credit, you may be able to qualify for a balance transfer card. Some cards offer a 0% introductory APR that can last for more than a year, giving you some time to make progress on existing debt.
• Payment plans: For medical bills, you might be better off working out a payment plan with the provider rather than borrowing. Oftentimes, they are willing to work with you and not charge interest.

Why You Should Trust Us

Investopedia collected and analyzed hundreds of key data points from over 70 companies across three months to identify the most important factors for readers choosing a co-signed or co-borrower loan.

We used this data to review each company for fees, repayment terms, income requirements, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999 and has been helping readers find the best co-borrower or co-signer loan companies since 2020.

How We Pick the Best Co-Signer or Co-Borrower Personal Loans

To evaluate and rank personal loan providers we collected hundreds of data points across 70 lenders, including traditional banks, credit unions, fintechs, and special interest finance companies. We researched and evaluated APRs, loan amounts and terms, fees, customer experience, and much more.

To rank the lenders in our database and to generate star ratings, we weighted the data we collected, based in part on what consumers told us were the most important features of a personal loan and lender in a survey we conducted. We grouped those factors into four broad areas:

• Loan costs (advertised APR, fees, and six other factors): 29.25%
• Loan terms (loan amount, repayment term, and three other factors): 22.25%
• Borrowing requirements (credit score, membership requirement, and six other factors): 28.5%
• Additional features (online application, pre-qualification, and eight other factors): 20%

Learn more about how we evaluated personal loans in our complete methodology.

Guide to Co-Signer or Co-Borrower Personal Loans

Learn more about personal loans:

• What is a personal loan?: A personal loan is an installment loan that can help you cover different personal expenses. Loans can be secured or unsecured, and are taken through banks, credit unions, and other financial institutions.
• How do personal loans work?: When you take out a personal loan, your lender deposits the proceeds as a lump sum in your account. Most lenders require that you pay your loan back in regular installments, usually monthly, plus interest.
• When are personal loans a good idea?: You can use a personal loan for any purpose, including debt consolidation, to buy a new car, or to take a vacation. But before you apply, make sure you can repay the loan to ensure you don't damage your credit.
• How to get a personal loan: There are several steps to getting a personal loan. Do your research on lenders and rates and see if you pre-qualify. Make a formal application (if necessary) and sign your loan documents when you're approved. After you receive your funds, begin repaying your loan.
• How to apply for a personal loan: Applying for a personal loan is fairly easy. Before you apply, though, review your finances and decide how much you need and can afford to borrow. Review the lenders that are available to you, see if you pre-qualify, and submit your application online or in person.
• How to use a personal loan: You can use a personal loan for any reason. Personal loans are helpful when you want to consolidate debt, make home improvements, cover emergencies, or make large purchases.
• Where to get a personal loan: You can apply for and get a personal loan from a bank or credit union. You may also want to consider other financial institutions and online lenders. Requirements and interest rates vary based on the lender you choose.
• Personal loans vs. credit cards: Personal loans are installment loans that usually come with fixed rates and can only be used once. Credit cards have revolving credit lines, which means you can use them more than once, and require at least a minimum payment.
• Alternatives to personal loans: Some of the common alternatives to personal loans include credit cards, lines of credit, payday loans, and retirement loans among others.
• Personal loan calculator: A personal loan calculator can help you figure out your loan payments and overall costs before you apply.
• Personal loans methodology: Review our methodology to see how we came up with our lists of best personal loans.