Getting yourself on the road in a new set of wheels can sometimes be easier with a helping hand. If you think your car finance application won’t be strong on its own, you could consider a joint car finance application. Let’s cover what’s involved, the benefits, potential pitfalls, and whether it’s right for you.

What is Joint Car Finance?

Joint car finance means that two individuals will apply for a car loan together within the same application. This is usually done between close relatives, spouses, or partners, and serves to strengthen the application.

Within a joint car finance application, both individuals’ income and credit history will be evaluated when the application is being reviewed. This type of application is typically done when one individual has a weaker credit report, or limited income, as adding an extra person could improve your chances of overall loan eligibility.

Why Consider a Joint Application for Car Finance?

When applying for car finance, providers will typically take an assessment of your finances as well as your credit rating to assess whether you are likely to be able to repay your loan.

If you suspect you will be rejected on this basis then adding an extra individual to the application could help sweeten the deal for the lender, especially if they have a strong credit history.

The Joint Application Car Finance Process

When applying for joint car finance, you will find the process similar to submitting an individual application. The only difference is that you are submitting the information of two individuals rather than just yourself.

In a joint car finance application, your provider will need to understand who you both are and what your finances look like. Providers will typically ask for:

  • Personal details: you will both need to provide identification, as well as proof of address.
  • Financial history: the lender may ask for bank statements from both of you to get a snapshot of your financial situation. They will also run a credit check to see if you both have a history of being able to repay your finances.
  • Employment details: the lender will also want to know what your employment status is, where you work, and what your salary is to assess whether you will be able to make payments throughout your financial plan.

The Benefits of Joint Car Finance

Opting for a joint car finance plan can provide several benefits:

Strengthening Your Application

Applying for car financing with another individual combines your overall financial strength which can significantly improve your chances of securing loan approval. If one party has a weaker credit history, pairing your application with someone with secure finances can demonstrate increased stability to the provider, making the loan less risky.

Shared Finances

Within a joint car finance application, two individuals will share the financial responsibility, making monthly repayments more manageable. This could be especially beneficial for couples, partners, or families who share the responsibility of owning the vehicle.

Challenges of Joint Car Finance

Whilst joint car financing has its many benefits, there are some things to consider before committing to applying:

Shared Liability

A joint finance plan means both individuals are equally liable for the loan amount, meaning that both parties are legally responsible for making timely payments. If one individual misses a payment, it can have a knock-on effect on both individuals’ credit scores which could negatively impact their ability to secure future credit.

Strained Relationships

Financial matters can be taxing on relationships, and any monetary issues caused by the joint finance plan could have detrimental consequences on your relationship with your co-applicant. Clear communication is crucial to minimise any risk to your relationship’s health.

Exiting the Agreement

If one party decides they want to leave the joint loan, it may be a difficult journey and may include additional costs. It may be possible to refinance the repayment plan with one person assuming full responsibility for the loan, however, this usually hinges on having good credit and meeting the providers’ refinancing criteria. You may also be able to sell the car to pay off the remaining loan, however, this may not be feasible in all situations. It’s best to stick to the agreed joint financing plan for the long haul.

Things to Consider When Applying

As you’ve discovered within this guide, applying for car financing with a co-applicant has both pros and cons. If you think a joint car financing plan is the right path for you, here are some things to consider when applying:

  • Creditworthiness: Choose an individual who has a history of good credit as your co-applicant. This will strengthen your chances of getting your loan approved and potentially securing lower interest rates. Double check there are no errors or discrepancies in both parties’ credit reports that could impact the application process.
  • Open communication: Once you’ve selected your co-applicant, it’s essential to discuss your financial situation clearly so they have a full understanding of what they are getting into. Discuss income, debt obligations, spending habits, and future financial goals so both parties feel comfortable with sharing financial responsibility and can enter the loan comfortably.
  • Set some ground rules: Sharing is the keyword throughout this guide and at this point in your application process, it would be beneficial for both individuals to understand how much they will be sharing when it comes to getting the keys to your new set of wheels. Discuss car usage and maintenance responsibilities to gain an understanding of how you will be sharing your new motor.

Is a Joint Car Finance Application Right for You?

Decided you will be moving forward with your co-applicant? See what car financing options Ucan can offer you today! Our application process is quick and easy, taking just 30 seconds to get a quote.