Can You Take Out a Loan On Behalf of Someone Else?
Last updated on March 7th, 2024 at 01:05 pm
Ideally, no, you should not be taking out a loan on behalf of someone else and the loan should be for you and only you. This is because the success of a loan (such as a payday loan) is based heavily on the individual credentials of a customer including their age, residential status, marital status, income and employment.
In addition, taking out a loan can be a big deal, in the sense that if unpaid, the fees can really add up and it can negatively impact your credit score. Therefore, it is better if the loan is in your name and for you, so that you do not share or hold the responsibility or potential outcomes.
When Is It Right To Take Out a Loan On Behalf of Someone Else?
There are times where you could apply on behalf of someone else which could make it acceptable, but the loan should still be in the main borrower’s name (not yours).
Examples include:
-If the individual is physically or visually impaired
-Being hearing impaired
-If you are a permanent carer or assist
-If the individual cannot use technology to make an application
Can You Take Out a Loan With Someone Else?
Yes, there are options if you wish to have a ‘joint loan.’ Certainly, a credit card or mortgage can often have one more than one beneficiary and this is common for couples who share their finances.
There are certain personal loans which allow you to share the repayments and it can be in two names, this might need to be upon request.
You may also consider a ‘co-signer’ loan whereby someone agrees to act as a co-signer for the borrower and cover their loan repayments if they cannot. This is a popular mainstream product and is often used by people with bad credit histories and those looking for loans with bad credit.
Since they cannot get a loan based on their own credentials, they have a person with a good credit score and income who agrees to ‘co-sign’ and cover the cost of the loan if they cannot meet the repayments. This is a practical way of sharing a loan, but note that the co-signer has a big responsibility and could very well be liable for any and all repayments if the main borrower cannot meet the collections.
