Best personal loans with co-signers

Couple sitting with a financial adviser in their kitchen, reading together about the best options for a personal loan with a co-signerImage: Couple sitting with a financial adviser in their kitchen, reading together about the best options for a personal loan with a co-signer

In a Nutshell

Applying for a personal loan with a co-signer or co-borrower with better credit than you may help your approval odds. We’ve rounded up the best personal loans with co-signers (or co-applicants) and sorted by uses that make them stand out, such as debt consolidation, credit building and home renovations.
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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: Achieve (formerly FreedomPlus)

Why Achieve stands out: Achieve, 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 24 hours. But keep in mind the exact timing will depend on your bank.
  • Rate discounts — Achieve offers rate discounts if you apply with a co-borrower, let Achieve use the loan funds to pay your creditors directly, and if you provide proof of “sufficient” retirement savings.
  • Origination fee — Achieve charges an origination fee between 1.99% and 6.99% 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 if your credit isn’t in the best shape, you may benefit by adding a co-borrower, which can help you get a better rate — if that person has good credit.

Read Achieve personal loan reviews for more info.

Best for credit building: Upgrade

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.

  • Loan terms available — You can borrow up to $50,000, with available terms of 24 to 84 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.
  • 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.

Best for home renovations and major expenses: LightStream

Why LightStream stands out: LightStream is an online lending division of Truist Bank 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 20 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 LightStream personal loan reviews to learn more.

Best for multiple loan terms and borrower perks: SoFi

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.
  • Fees — SoFi has no prepayment penalty or late fees. Origination fees aren’t required, according to the info on the SoFi website — but there’s an option to pay a one-time fee for a break on your interest rate.
  • 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, repayment term and other loan terms.
  • Member perks — Members can benefit from career coaching, financial planning, exclusive member events, partner discounts and more.

For more info, read SoFi personal loan reviews.

What’s the difference between a co-signer and a co-borrower?

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 and is able to make payments if you can’t. 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. Plus, their credit score may temporarily take a hit when applying for the loan and signing onto the loan may increase their debt-to-income ratio.

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.

Make sure you know if you’re able to remove your co-signer from your loan or not. Some lenders don’t allow a co-signer release, and the only way to remove your co-signer is by refinancing.

How to get a personal loan with a co-signer or co-borrower

Each lender has a different application process but here are the basic steps to take when applying for a personal loan with a co-signer or co-borrower.

  • Check your and your co-signer’s credit scores 
  • Find and compare lenders that accept co-signers or co-borrowers
  • Prequalify if available and compare terms
  • Submit your application

If possible, it’s a good idea to shop around for personal loans to find the best rate for you and your co-signer.

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.

About the author: Taylor Medine is a freelance writer who’s covered all things personal finance for the past seven years. She enjoys writing financial product reviews and guides on budgeting, saving, repaying debt and building credit. … Read more.