Can I opt for a joint EMI with a co-applicant?
Curious about EMIs
Yes, you can opt for a joint Equated Monthly Installment (EMI) with a coapplicant when taking out certain types of loans. This is often referred to as a joint loan or coborrower loan. Here's how it works:
1. CoApplicant: A coapplicant is someone who applies for the loan along with you, sharing both the responsibility for repaying the loan and the ownership of the financed asset, if applicable.
2. Eligibility: Lenders generally allow close relatives such as spouses, parents, children, or siblings to be coapplicants. Some lenders may have specific eligibility criteria, so it's essential to check with the lender.
3. Income and Creditworthiness: Having a coapplicant can strengthen the loan application, especially if the primary applicant has a lower income or credit score. The combined income and creditworthiness of both applicants are considered in the loan approval process.
4. Loan Amount: With a joint EMI, you can potentially qualify for a higher loan amount since both applicants' incomes are considered. This can be beneficial when purchasing a highvalue asset like a home or a car.
5. Repayment Responsibility: Both coapplicants are equally responsible for repaying the loan. If one applicant defaults on payments, the other is legally obligated to make the payments in full.
6. Credit History Impact: The loan and its repayment history will appear on the credit reports of both coapplicants. This can help both individuals build or improve their credit scores if they make ontime payments.
7. Asset Ownership: In cases like home loans or vehicle loans, the coapplicants are typically joint owners of the property or asset being financed. This means they share ownership rights and responsibilities.
8. Legal Agreement: It's essential to have a clear understanding of the terms and conditions of the joint loan. A legal agreement or contract may be required, outlining the rights and responsibilities of each coapplicant.
Before applying for a joint EMI, it's crucial to consider the implications and responsibilities involved. Make sure you and your coapplicant understand the terms of the loan and are both financially capable of meeting the EMI obligations. Additionally, choose a coapplicant you trust and with whom you can communicate effectively about financial matters.