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.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.
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)
- Best for credit building: Upgrade
- Best for home renovations and major expenses: LightStream
- Best for multiple loan terms and borrower perks: SoFi
- Best for a credit union option: PenFed
- What are personal loans with co-signers?
- When is a personal loan with a co-signer a good idea?
- Alternatives to personal loans with a co-signer
- How to get a personal loan with a co-signer or co-borrower
- FAQs about co-signer loans
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.
Pros
- Same-day decision possible
- Multiple rate discounts available
- Funding may take as little as 24 hours
Cons
- Origination fee
- Competitive rates for strong 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.
Pros
- Straightforward application if you’re self-employed
- Wide range of loan terms
- No prepayment penalties
Cons
- High origination fee
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.
Pros
- Competitive interest rates
- No application, origination or prepayment penalty fees
- Loan terms up to 20 years for qualifying home improvement
Cons
- Strong credit required for lowest rates
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.
Pros
- Rate discount for autopay
- No prepayment or late fees
- Unique member perks
Cons
- Possible origination fee
- Lowest rates are for applicants with the strongest credit
For more info, read SoFi personal loan reviews.
Best for a credit union option: PenFed
Why PenFed stands out: Credit unions can sometimes have restrictions on who is eligible for membership, but PenFed memberships are open to anyone. You’ll have access to a variety of benefits like discounts and fee-free ATMs. PenFed doesn’t say on its site whether you can apply with a co-signer, but it allows co-borrowers on personal loans.
Pros
- Next day funding possible
- Prequalification available
- Competitive interest rates
Cons
- Must be a member (but you can become a member during your application process)
What are personal loans with co-signers?
A personal loan with a co-signer functions much the same as a typical personal loan. The main difference is that there is a second person signing onto your personal loan. A co-signer isn’t liable to make payments and won’t receive any of your personal loan funds. But they’re liable to repay the loan if you default on it.
If you don’t have great credit or have a short credit history, qualifying for a personal loan by yourself may be difficult. Using a co-signer can help you get approved for a personal loan and it may give you better rates, terms, or even be approved for a higher personal loan amount than you would on your own.
When is a personal loan with a co-signer a good idea?
Getting a personal loan with a co-signer may be a good idea if you’d have a hard time qualifying for a personal loan by yourself. Typically, a good co-signer will have better credit than you. This can help you qualify for lower interest rates, which can make personal loan payments more affordable. It may also mean that you pay less interest over the life of the loan.
Before signing up for a personal loan with a co-signer, you’ll want to make sure you can afford the payments on your own for the entirety of the loan. Using a co-signer may increase what you’re approved for, but you shouldn’t get a loan that’s more than what you actually need. If you end up missing payments or even defaulting on your loan, not only will your co-signer be responsible to make payments on your loan, but their credit — along with yours — may also suffer.
Alternatives to personal loans with a co-signer
If you aren’t able to find a co-signer for a personal loan, you may still have some options.
- Qualify on your own — Some lenders cater to people who don’t have good credit and may be able to approve you without a co-signer. But be careful: Lenders that target borrowers with bad credit may charge high fees or interest rates.
- Payday alternative loans — These loans are offered by federal credit unions and are a more affordable alternative to payday loans. Fees and interest rates are capped, but the available loan amounts are smaller.
- Payday advance apps — If you’re in a tight spot and just need a bit of extra cash, you may be able to access your paycheck early — possibly without interest. Just keep in mind that there may be a limit to how much you can get advanced, and there may be additional fees.
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.
Our methodology: How we pick the best personal loans
Credit Karma’s editors evaluate the best personal loans by reviewing key features of dozens of popular lenders. Those features fall into three important categories:
- Affordability: We start by checking if a lender’s rates are competitive: are they higher than average or are they lower than many competitors? From there, we analyze if fees — particularly an origination fee — may make your loan more unaffordable. Last, we’ll check if the lender offers rate discounts for items such as automatic payments that may reduce your rate.
- Customer-friendly features: Taking out a personal loan is a big financial commitment, so we prioritize lenders that make things easier for you. For instance, do they offer a wide range of loan amounts for people with different borrowing needs? Do they offer at least several loan terms to give you more flexibility with your monthly payment? And, crucially, can they fund your loan quickly? A lender will also get bonus points for offering direct payments for debt consolidation or other customer-friendly features.
- Transparency: We believe personal loan terms should be easy to find and decipher. Prequalification, which lets you check what rate you may qualify for without a hard credit inquiry, is particularly important. We also check to see if a lender has been recently penalized by regulators.
Estimate personal loan costs
To better understand the total cost of any personal loans you’re considering, use an online calculator like Credit Karma’s simple loan calculator. A loan calculator can help you estimate your monthly payment and how much you’d pay in interest versus principal over the length of the loan.
FAQs about co-signer loans
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.
The ideal co-signer or co-borrower is someone who has good or excellent credit and can make payments if you can’t. A credit score is generally considered “good” if it’s 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.
*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.