Power Up Your Loan! How a Co-Signer Can Help You Get Approved

Instant personal loans from various Indian loan apps are fast becoming go-to options for a big proportion of the working population in scenarios where they require cash urgently. These loans are easier to get and require less paperwork. They also have convenient terms and conditions for borrowers in most cases. However, what if your eligibility quotient is lower for a personal loan or the lender asks for extra assurance to approve it? In these situations, getting a co-signer for the loan may be a wise move. Let us learn more about it in this article.

What is a Co-Signer and the Difference from Co-Applicants

Co-signers are those who agree to take on the responsibility of clearing the loan EMIs if you default in the future. Choosing to apply for instant personal loans with co-signers can be a viable decision in several situations. Someone who has a good credit history may be able to boost your approval chances significantly. This comes in handy if you have a poor credit score or have no credit history at all. If the profile of the co-signer is good, then it may help you save more on your loan, since the lender may approve it at a lower interest rate.

Yet, it is important to remember that a co-signer and co-applicant do not have the same roles. Co-applicants are co-borrowers of loans and have the same responsibility of paying the EMIs as you. However, co-signers are not responsible for regularly paying the EMIs. They only have the liability to repay them in case you default in the future.

Key Advantages of Co-Signers

Co-signers can sometimes help you get instant personal loan approval without any hitches. Here are some of the benefits that are worth noting in this regard.

• Co-signers who have solid credit scores can potentially increase your chances of loan approval, while helping you obtain lower rates of interest simultaneously.
• Those who have zero or limited credit history may also be able to assure lenders about their overall creditworthiness if they have co-signers.
• The co-signer’s income may also be useful in lowering the overall DTI or debt-to-income ratio of your application. This makes it easier to get the loan in the first place.

Key Considerations Before Onboarding a Co-Signer

Here are a few things that you should keep in mind before finalizing your co-signer for the personal loan.

• Missing EMIs will negatively affect the co-signer’s credit score. Discuss this openly with the person concerned and make sure that he/she is aware of the risks involved in the process.
• Just having a co-signer does not mean that your loan will be approved automatically. Your lender will closely look at your repayment ability, income, and other factors before sanctioning the loan. 
• Keep an eye on the co-signer criteria which may vary across multiple lenders. The usual prerequisites are stable monthly income and a credit score of 670 or higher. Your co-signer’s DTI should also be minimal in order to increase your chances of loan approval.
• Opt for a co-signer who is fully aware of the terms and conditions and is comfortable with the legal responsibility in question.

Conclusion

While applying for a personal loan with a co-signer may increase your chances of approval, make sure you remember these pointers before going ahead. Also note that requesting a close friend, family member, or colleague to be a co-signer is a major life decision. Go for a trusted person who has a wonderful relationship with you already. Talk honestly about the terms and conditions of the arrangement and make sure that you are both on the same page before you apply for the personal loan.