Bringing a co-applicant to a loan application can be a beneficial strategy for increasing the chances of loan approval and getting a better interest rate. In India, a co-applicant is someone who joins the primary borrower in the loan application process and is jointly liable for repaying the loan. In this blog post, we will discuss how bringing a co-applicant strengthens a loan application in India.
- Increases the Income eligibility – One of the main benefits of having a co-applicant is that it increases the income eligibility for the loan. This is because the co-applicant’s income is also considered while calculating the loan eligibility. With a co-applicant, the lender can consider a higher combined income, which can increase the chances of loan approval.
- Chances of approval are higher – A co-applicant can also increase the chances of loan approval. This is because the lender views the loan application more favorably when there is more than one person responsible for repaying the loan. A co-applicant can be a guarantor for the loan, which can provide an added layer of security for the lender.
- Improved Credit Score – Having a co-applicant with a good credit score can also improve the overall credit score of the loan application. This is because the co-applicant’s credit score is considered along with the primary borrower’s credit score. A good credit score can increase the chances of loan approval and also get a better interest rate.
- Better Interest Rate – With a co-applicant, the lender can offer a lower interest rate on the loan. This is because the lender views the loan as lower risk, as there are two people responsible for repaying the loan.
- Flexibility in Loan Disbursal – Having a co-applicant can also provide more flexibility in the loan disbursal process. This is because the co-applicant’s income can be used to repay the loan in case the primary borrower is unable to repay the loan.
- Joint Ownership – In case of a property loan, having a co-applicant can make it easier to own the property jointly. The co-applicant will be a co-owner of the property and this fact gives more confidence to lenders to easily process your loan application successfully.