What is the difference between a co-applicant and a guarantor?

Availing an instant personal loan isn’t difficult if you are doing so with a joint venture. Be it a guarantor or a co-applicant, we all have help in hand if we learn to ask. But how do a guarantor & a co-applicant differ?

This article clarifies this and also persuades you to choose the wiser options while availing an instant personal loan. Today, Buddy Loan is one of the biggest loan aggregators that has dispensed personal loans with lower interest rates starting at 11.99%p.a., customized EMI options, etc.

However, will a co-applicant or a guarantor ease your burden on repayment or credit score? We shall check that below:  

Co applicant for a personal loan

In order to get a better deal on your personal loan, we avail a co- applicant or a co-borrower. Your loan approval or eligibility increases if your co-applicant has good income & credit score.

The next question is who can be co-borrowers? In most of the scenarios, it is usually the family members, like your spouse or parents. Of course, there are lenders who allow your siblings to be allocated as co-applicants too.

Similarly, of the co-applicant has any bad credit score or a bad income proof, the chance of availing a loan is likely low. In here, a default will affect both the scores.

Guarantors in personal loan

Usually, banks require guarantors before they approve of any personal loans. A guarantor is a person or institution who is liable for the loan as a principle borrower. A guarantor gives the consent to the lender that they will be backing the borrower in case of defaults. 

But not every personal loan is a “guarantor” personal loan. Banks and other financial institutions prefer guarantors with good income over Rs. 25000 to qualify for a consent.

A guarantor should be aware of the consequences of the loan default and will bear the responsibility of repayment in case of borrower’s default. A guarantor loan is an unsecured loan whose signature is mandate on the credit agreement.

To remind you so, Buddy Loan disburses all personal loans as unsecured loans, yet with lower interest rates & customised EMI options. 

Conclusion

A personal loan eligibility is always dependent on you majorly, however, a co-applicant and a guarantor serve as a catalyst in loan approval.