Loans are one of the safest options to fulfill all your financial needs without hurting your savings or income directly. They allow you to cover your extra expenses other than your daily spendings. Hence, be it a medical emergency, home renovation, travel, or buying a house, there are many loan options available. Moreover, due to the rise in technology, it has become easier for people to access different types of loans on digital platforms like personal loans with co applicant and instant unsecured personal loans. However, many borrowers are not aware about the difference between both the loans.
However, both the options are better to help you access funds quickly, but there is a difference between both the loans in terms of eligibility, approval process, risk and repayment responsibility. In this blog, we will understand the key difference between both the loans to make it easier for you to choose the right option between the two after considering your income, repayment capacity and credit score.
About Personal Loans with Co Applicant?
Personal loan based on co-applicant involves two individuals who apply together for the same loan. The co-applicant becomes equally responsible.
A co-applicant may be:
- Spouse
- Parent
- Sibling
- Adult child
In this loan, both the income is taken into account while checking the personal loan eligibility.
Why Choose This Option?
- Higher loan eligibility
- Better chances of approval
- Lower interest rate is charged (if the credit score of the co-applicant is good)
- Helpful if your income alone is insufficient
However, both the borrowers are liable for repayment.
About Instant Unsecured Personal Loans?
Instant Unsecured Personal Loans are personal loans that are granted without collateral and co-signer, only on the basis of the main borrower’s credit rating and income.
These loans are:
- Quick to apply
- Fully digital in many cases
- Approved within hours (subject to eligibility)
- Based on your individual credit score and repayment capacity
As there is no co-applicant or collateral in the loan, the interest rate is slightly on the higher side.
Key Differences Between the Two:
Here is a clear comparison to help you understand:
| Feature | Personal Loans with Co Applicant | Instant Unsecured Personal Loans |
| Number of Borrowers | Two | One |
| Income Considered | Combined income | Individual income |
| Approval Chances | Higher (shared profile) | Depends on single profile |
| Interest Rate | Often lower | May be slightly higher |
| Loan Amount | Higher eligibility | Limited to individual income |
| Risk | Shared between both | Entirely on one borrower |
| Documentation | May require income proof of both | Only primary applicant documents |
These are some significant differences between the two loans that will help you understand which one suits you the best.
Understanding Joint Personal Loan Eligibility:
In applying for personal loans with co-applicant, lenders check:
- Combined monthly income
- Credit score of both applicants
- Existing EMIs of both
- Employment Stability
- Age and Repayment Capacity
Scenario Comparison:
| Details | Single Applicant | With Co Applicant |
| Monthly Income | ₹30,000 | ₹30,000 + ₹40,000 |
| Credit Score | 650 | 650 + 780 |
| Maximum EMI Allowed (40%) | ₹12,000 | ₹28,000 |
| Approx Loan Eligibility | ₹2 lakh | ₹5–6 lakh |
This is an example of how joint personal loan eligibility adds to borrowing power.
Reasons To Choose Personal Loans with Co Applicant:
You should consider personal loans with co-applicant if:
- If you are someone with a low income
- You need a higher loan amount
- You would like better interest rates.
- You have a financially secure relative who is willing to cosign
This option is particularly suitable for a big expense like a medical bill or renovating a house.
However, remember:
If one of the borrowers defaults on the EMI, both their credit scores will be impacted.
Reasons To Choose Instant Unsecured Personal Loans:
Instant unsecured personal loans are suitable if:
- You have a very good credit score of above 700.
- Your income is adequate
- You need urgent funds
- You prefer financial independence.
- You do not want to involve anyone else
Since the approval depends only on your profile, this process is quicker and more straightforward.
This has become so easy that almost every digital platform is allowing the entire process online. Fintech companies like Olyv allow the borrowers to compare lenders, check eligibility, and apply digitally with no branch visits. In this manner, informed decisions are made without much paperwork.
Risk Comparison: Which is Safer?
Risk in Personal Loans with Co-Applicant:
- Shared liability
- Relationship strain if repayment issues arise
- Co-applicant’s Credit Score Would be Affected
Risk in Instant Unsecured Personal Loans
- Higher interest burden
- Limited Loan Eligibility
- Sole responsibility for repayment
The safer alternative depends on your financial discipline and your relationship dynamics.
Differences In Interest Rates:
Interest rate depends upon the assessment of risk.
- If one of the co-applicants has an excellent credit score of 750 and above, they may be offered lower rates.
- For instant unsecured personal loans, interest rates depend only on your profile.
Example:
| Loan Type | Loan Amount | Interest Rate | EMI (3 Years Approx) |
| With Co Applicant | ₹5,00,000 | 12% | ₹16,600 |
| Unsecured (Single) | ₹5,00,000 | 16% | ₹17,600 |
Even a minor difference in the interest rate will either increase or decrease your interest rate.
Impact on Credit Score
For personal loans with co applicant:
- As both credit scores are linked to the loan, any small mistake in the process will affect both the applicant’s credit score.
- Even if it’s a co-applicant loan, A missed EMI will affect both borrowers and will put a bad impression on both the profiles.
- The advantage of a co-applicant loan is that making timely repayment improves both profiles significantly. Hence, it is easier to improve both your profiles together.
For instant unsecured personal loans:
- In this case, only the primary borrower’s credit score is important
This is important when evaluating long-term financial health.
Speed of Approval:
If urgency matters, instant unsecured personal loans facilitate the process sooner because:
- Only one profile is verified
- No dependence on the second applicant’s documents
- Non-technical risk assessment
However, in the case of joint loans, approval can also be easy if the co applicant has good credit.
Final Thoughts:
Personal loans with co-applicant and instant unsecured personal loans – selection of one over the other depends upon your financial condition and comfort level.
However, in case of higher eligibility levels along with better interest rate demands, the addition of a co-applicant can act as an advantage. But it should be borne in mind that the burden of the loan repayment rests entirely on both individuals. In contrast, unsecured loans can prove to be more independent as they can process repayment promptly, albeit at slightly higher costs.
Before Applying:
- Check your credit score
- Calculate EMI affordability
- Compare lenders carefully
- Avoid multiple unnecessary applications
Olyv is an example of such a platform. Such platforms enable the comparison of loan options with the help of the internet.
In conclusion, the right choice to make is one that aligns with your income stability and financial planning. Be responsible with borrowings as well as repayments to keep your credit history healthy.
