What is a joint loan?
Written by
Joe Towner
Reviewed by
Amy LancashireA joint loan is a loan taken out by two or more people who are equally responsible for paying it back. Everyone named on the agreement is liable for the full amount, not just their share. The two borrowers could be partners, family members or friends looking to fund something they share, like home improvements or a car.
Borrowing with someone else changes how the loan works, who the lender checks, and what happens if things go wrong. Here's what a joint loan involves, the risks worth understanding first, and how it compares to the alternatives.
How does a joint loan work?
A joint loan is a single loan with two or more borrowers named on one agreement. There's one loan amount, one interest rate and one set of monthly repayments, shared between everyone who signs.
When you apply, the lender looks at everyone named on the application. That usually means checking each person's income, outgoings and credit history, then making a decision based on the combined picture. Because two incomes are being assessed, joint applicants can sometimes access a larger amount than one person could on their own.
Once the loan is approved, the money is typically paid into one nominated bank account, which can be an individual or joint account. From that point, everyone on the agreement is responsible for the repayments, no matter whose account the money landed in or who spends it.
What can I use a joint loan for?
In most cases, a joint loan can be used for the same things as a standard unsecured personal loan: home improvements, a car, a wedding, or bringing existing debts together into one payment.
Who you can apply with depends on the lender. Many allow you to borrow with a partner, spouse, family member or friend. Lenders set their own eligibility rules, and some ask that joint applicants live at the same address, so it's worth checking before you apply.
One thing to know: in the UK, credit cards can't be held jointly. You can add someone as an additional cardholder, but the account and the debt stay in one person's name. Joint borrowing applies to loans, mortgages and overdrafts, not credit cards.
What does joint and several liability mean?
This is the most important thing to understand before you apply. A joint loan comes with what's called ‘joint and several liability’. It means each borrower is responsible for 100% of the debt, not half of it.
In practice, if the other person stops paying, misses payments or can't afford their share, you're legally responsible for covering the full amount on your own. The lender can pursue any borrower for the entire balance. It doesn't matter what you agreed between yourselves about who pays what.
This is why a joint loan is worth thinking about carefully. You're not just responsible for your part. You're responsible for all of it.
How does a joint loan affect my credit score?
Taking out a joint loan creates a financial association between you and the people you borrow with. This links your credit files, so lenders can see the connection when either of you applies for credit in future.
That link works both ways. If the loan is repaid on time, it can help build everyone's credit history. If payments are missed, it can damage everyone's credit, including yours, even if you paid your share every month. The association usually stays on your file until the loan is settled and you formally break the link. You can read more about whether joint accounts affect your credit score and what affects your credit score more broadly.
What's the difference between a joint loan and a guarantor loan?
Joint loans and guarantor loans both involve a second person, but their roles are very different.
Feature | Joint loan | Guarantor loan |
|---|---|---|
Who gets the money | Shared between all borrowers | The main borrower only |
Who repays | Everyone, from day one | The main borrower, unless they can't pay |
When the second person pays | Always jointly responsible | Only if the borrower defaults |
Whose credit is affected | Everyone named | Both, but mainly the borrower |
With a joint loan, everyone shares the money and the responsibility from the start. With a guarantor loan, the guarantor doesn't receive any of the money and only has to step in if the borrower can't keep up repayments. If you're borrowing together for a shared purpose, a joint loan usually fits. If someone is helping you get approved but won't use the money, a guarantor arrangement may suit better.
Pros and cons of a joint loan
Like any borrowing, a joint loan has trade-offs worth weighing up.
Pros
Two incomes are assessed, so you may be more able to borrow the amount you need
Adding a borrower with a stronger credit history could improve your chances of approval
Shared responsibility can make sense for something you're both paying for anyway
Cons
You're liable for the full amount, not just your share
Your credit files are linked, so one person's missed payment can affect everyone
It's difficult to undo once the loan is running
If your relationship or living situation changes, you stay tied to the debt
What happens if we can't agree, or the relationship ends?
A joint loan doesn't end just because a relationship or friendship does. Everyone named stays fully liable until the loan is repaid, whatever happens between you.
You also can't usually remove someone from a joint loan on your own. Lenders rarely agree to take a name off an existing agreement, because it changes the basis they approved it on. In most cases your options are to keep paying it together, repay it early if you can, or apply for a new loan in one person's name to pay off the joint one.
If you're worried about repayments or a shared debt after a separation, free and impartial help is available from MoneyHelper. It's worth getting advice early rather than letting missed payments build up.
Joint loans and financial abuse
A joint loan ties two people together financially. Both of you are jointly and severally liable, which means each of you is responsible for the full balance, not just half. If one person stops paying, or takes the money and leaves, the other is legally on the hook for the whole amount. Missed payments show on both credit files.
That shared responsibility relies on trust. Economic abuse, where one person controls another's access to money, is more common than many people realise. According to Surviving Economic Abuse, 1 in 6 women in the UK have experienced economic abuse by a current or former partner.
Being pressured into taking out a loan you didn't want, or being made responsible for a debt you had no say over, is a recognised form of economic abuse (sometimes called coerced debt). It can be hard to spot at the time, and once a joint loan is in place you can't simply remove yourself from it.
If you feel pushed into applying for a joint loan, or you're worried about how money is being controlled in your relationship, support is available and you don't have to deal with it alone:
National Domestic Abuse Helpline: 0808 2000 247, or the Men's Advice Line: 0808 8010 327
Alternatives to a joint loan
A joint loan isn't the only way to fund a shared goal.
A sole loan in one person's name keeps the liability and the credit link with that person alone
A guarantor loan, if one of you needs support to get approved but won't be using the money
Saving up, if the purchase can wait, avoids interest and shared liability altogether
Joint Loan FAQs
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
