What is a joint personal loan?
A joint personal loan is an unsecured loan taken out by two people together. Both borrowers are jointly and severally liable for the full debt, meaning each person is legally responsible for repaying the entire loan, not just half. Joint personal loans are available from most UK banks, building societies, and online lenders.
Typical loan amounts range from £1,000 to £25,000 with repayment terms of one to seven years. Interest rates on joint loans may be more competitive than individual loans because the lender has two people to recover the debt from, reducing their risk.
When to consider a joint personal loan
Joint personal loans can make sense in several situations:
- Combined affordability: Borrowing more than one person could qualify for individually
- Better rates: If one applicant has an excellent credit score, combining applications may secure a lower rate than the other person could get alone
- Shared expenses: Home improvements, weddings, or vehicle purchases that benefit both parties
- Debt consolidation: Combining debts into one manageable repayment when both parties share the obligation
However, a joint loan is not always the best option. If one person has a poor credit score, adding them to the application can actually result in a higher rate or rejection. In such cases, the person with better credit applying alone may be more effective.
How joint personal loans work
The application process is similar to an individual loan, but both applicants provide their details, undergo credit checks, and have their income and expenditure assessed. The loan funds are typically paid into one nominated bank account.
Monthly repayments are usually taken from one account via direct debit, although both borrowers are liable. If the direct debit fails, the lender can pursue either or both borrowers for the full outstanding amount.
Interest rates on personal loans in the UK are typically 3–15% APR depending on the amount, term, and creditworthiness of the applicants. The best rates are usually available on loans of £7,500 to £15,000 due to how lenders price their products.
Responsibilities and risks
The most important risk to understand is joint and several liability. This means:
- If your co-borrower stops paying, you must pay the full remaining balance
- If you separate from your co-borrower, the debt remains shared until fully repaid. A personal relationship breakdown does not release either party from the loan
- Missed payments affect both borrowers' credit scores, even if only one person was responsible for making payments
- A financial association is created on both credit reports, linking your credit histories
⚠️ Once a joint personal loan is in place, you cannot simply remove one person from the agreement. The loan would need to be repaid in full (possibly through a new individual loan taken by one party) to end the joint obligation. Consider this carefully before committing.
Joint loans and credit scores
Taking a joint loan creates a financial association between both borrowers on their credit files. This association means future lenders can see your co-borrower's credit behaviour when assessing your applications. If your co-borrower has or develops a poor credit history, it could affect your own ability to borrow.
If the joint loan is repaid and you want to remove the financial association, you can request a financial disassociation from the credit reference agencies (Experian, Equifax, TransUnion). This is only possible once all shared financial products are closed.
💡 Before taking a joint loan, both parties should check their credit reports. Free services such as ClearScore, Credit Karma, and MSE Credit Club provide access to your credit file. Identify and resolve any issues before applying to maximise your chances of approval at the best rate.
Alternatives to joint personal loans
Before committing to a joint loan, consider whether alternatives might better suit your situation:
- Individual loans: If one person can qualify alone, this avoids linking credit files
- 0% purchase credit cards: For specific purchases, a 0% card can be interest-free for 12–24 months
- Guarantor loans: One person borrows while the other guarantees the debt without being a joint borrower
- Informal arrangement: One person takes the loan individually, and both contribute to repayments informally. This puts all legal responsibility on one person but avoids financial association
Get expert help with your borrowing
Whether a joint loan is the right option depends on your specific financial circumstances, credit profiles, and the nature of the expense. For larger borrowing needs related to property, Nesto can match you with experienced mortgage and finance brokers who can help you explore all available options and find the most cost-effective solution.