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Getting approved for a personal loan may be more challenging if you have no credit or less-than-perfect credit.
Fortunately, some lenders will let you apply for a personal loan with a co-signer or co-borrower, which may improve your chances of getting approved or securing a more competitive interest rate. A co-signer agrees to pay back your loan if you default. On the other hand, a co-borrower applies for the loan with you as a joint applicant and is also responsible for making regular monthly payments.
Read on for our take on the best personal loans with co-signers to help you find the best one for your situation.
- Best for paying off credit card debt: FreedomPlus
- Best for credit building: Upgrade
- Best for home renovations and major expenses: LightStream
- Best for multiple loan terms and borrower perks: SoFi
- Best for large loan amounts: Wells Fargo
- What you should know about personal loans with co-signers
Why FreedomPlus stands out: FreedomPlus, a lending arm of Freedom Financial Network, offers an interest rate discount if you use the loan funds to directly pay off your debt with other creditors.
- Quick application process — You may be able to get a same-day decision on your application, and funding might take as little as 48 hours.
- Rate discounts — FreedomPlus offers discounts if you apply with a co-borrower, let FreedomPlus use the loan funds to pay your creditors directly, and if you have more than $40,000 saved up for retirement in certain types of accounts. The lender says these discounts could help you get a lower rate.
- Origination fee — FreedomPlus charges an origination fee between 1.99% and 4.99% based on your loan amount and loan term. But there’s no prepayment penalty, so you can pay off your loan early without worrying about an extra fee.
- Competitive rates for people with strong credit — Lenders typically offer the lowest interest rates to people with excellent credit. But even if your credit isn’t in the best shape, FreedomPlus says that adding a co-borrower with “sufficient income” to your application may help you qualify for a better rate.
Read our FreedomPlus personal loan review for more info.
Why Upgrade stands out: Upgrade offers free VantageScore 3.0® credit score monitoring with weekly updates, credit-score simulation and score trending charts. These tools may come in handy if you’re working to build credit and hoping to qualify for your next personal loan without a co-signer or co-borrower.
- Only two loan terms available — You can borrow up to $35,000 for 36 months or 60 months. If you want a shorter loan term, you’ll have to look elsewhere.
- Good if you’re self-employed — Upgrade has a straightforward application process for self-employed workers. You’ll need two years of tax returns and recent bank statements to show proof of income. You can use the loan funds to improve or grow your business. This is a unique feature — some lenders prohibit you from using personal loans for business purposes.
- Origination fee — Upgrade has an origination fee range that’s higher than other lenders on this list. This fee is deducted from the loan proceeds. Most lenders in this roundup charge no origination fee at all. On the bright side, Upgrade has no prepayment penalty.
To learn more, read our Upgrade personal loan review.
Why LightStream stands out: LightStream is an online lending division of Truist that offers loans for a variety of purposes. You can apply to borrow up to $100,000 for costs including adoption expenses, home improvements, medical bills, wedding expenses and pre-K-12 education costs.
- Low interest rates — LightStream offers some of the lowest interest rates that we could find online. Submitting a joint loan application with someone who has strong credit may help you qualify for its best rates. LightStream also offers an interest rate discount of 0.5 percentage points if you sign up for autopay. The lender may also beat a competitor rate by 0.1 percentage point if you’re able to prove you qualify for a better rate elsewhere.
- No fees — LightStream personal loans have no application, origination or prepayment penalty fees.
- Long loan terms for home improvement — Terms vary depending on the loan amount and the reason you’re borrowing money. LightStream offers loans that can be used for home improvement projects, pool installation and solar panel installation with terms of up to 12 years.
- Healthy credit required — LightStream says it aims to offer low interest rates to people who have a “track record of financial responsibility.” To qualify for a low rate, the lender says you or your co-applicant will need to have several years of credit history with few late payments, sufficient income and a record of saving.
Read our LightStream personal loan review to learn more.
Why SoFi stands out: SoFi offers loan terms ranging from two to seven years. If you’re approved for a SoFi personal loan, you can also take advantage of valuable membership perks like loan forbearance during a period of unemployment.
- Rate discount — SoFi offers an interest rate discount of 0.25% if you sign up for autopay.
- No-fee promise — SoFi has no origination, prepayment penalty or late fees.
- Low rates for strong credit — SoFi says it offers low interest rates to people who have “a responsible financial history.” The rate you’re offered will depend on your employment history, income, loan term and other factors.
- Member perks — If you’re laid off, you can apply for SoFi’s unemployment protection, which may pause your payments temporarily and offer job placement assistance while you get back on your feet. Members can also benefit from career coaching, financial planning, exclusive member events, partner discounts and more.
For more info, read our SoFi personal loan review.
Why Wells Fargo stands out: You can apply to borrow up to $100,000 for unsecured loans and up to $250,000 for loans secured by CDs or savings.
- Relationship discounts — Wells Fargo offers a 0.25% rate discount if you sign up to make direct deposit payments from a Wells Fargo account.
- Low fees — There’s no origination fee for unsecured loans. But there is a $75 origination fee for secured loans.
- Existing customers can apply online — Wells Fargo is a large brick-and-mortar bank, but existing customers don’t need to visit a physical location to apply for a personal loan. They can apply online and, if approved, potentially get funding as soon as the next business day. But if you’re not an existing customer, you’ll need to visit a branch to speak with a banker.
Read our Wells Fargo personal loan review for more details.
What you should know about personal loans with co-signers
Having no credit or bad credit doesn’t mean a personal loan — or one with affordable rates — is completely out of reach. Applying with a co-signer may help you get approved for more money or a better interest rate than you might get on your own.
Lenders that don’t accept co-signers may still let you apply with a co-borrower. These two terms are similar but slightly different. In both cases, a lender considers your income and credit along with another person’s income and credit to approve you for a loan.
Here’s where the difference comes into play.
- A co-signer backs your loan and takes financial responsibility if you default. Basically, a co-signer gives the lender assurance that someone will pay back the loan if you don’t.
- A co-borrower applies for the loan with you as a joint applicant and is also responsible for making regular monthly payments.
If a lender doesn’t accept co-signers but does accept co-borrowers, you can consider submitting a joint application and then taking full responsibility for all loan payments.
How to find a co-signer or co-borrower
The ideal co-signer or co-borrower is someone with good or excellent credit. A good credit score is generally considered 700 or higher on a scale of 300 to 850.
Keep in mind that a co-signer or co-borrower assumes a level of risk when signing on the dotted line of your loan agreement. If you stop making payments, their credit can suffer, and they may be on the hook for the loan balance.
For this reason, family members or close friends who trust you will probably be the most likely to co-sign your loan.
But you shouldn’t take it too personally if you ask someone to co-sign and they say no. Co-signing can be a long-term financial commitment, and disputes over the repayment of your loan could cause a relationship to sour. If you can’t find a co-signer, learn about other ways to qualify for a loan.
How we picked these loans
We looked at personal loans with co-signers and co-borrowers offered by brick-and-mortar and online lenders. We reviewed the interest rates, fees, loan terms, fine print and borrower benefits for each one. From there, we categorized personal loans that offer the best terms and features.