Shared Debt, Shared Risks: What You Should Know About Joint Loans

Taking a joint loan often feels like a natural step when two people plan a life or a large purchase together. A couple buying their first flat, siblings pooling resources for a parent’s home renovation, or partners funding a small business may all sign as co-borrowers so the lender can count both incomes. The higher eligibility and shared repayment plan seem practical. The catch: once the papers are signed, the debt ties both names together in ways that can outlast the relationship, the house, or the original plan.

Shared Liability and Repayment Pressure

In a joint loan, the lender doesn’t see “my half” and “your half.” Each co-borrower is responsible for the entire repayment. If one person’s income dips, quits paying, or disappears after a dispute, the other must keep the EMIs going to avoid penalties, collection calls, or legal notices. Many borrowers first learn this when they receive a reminder for an EMI they assumed the other was handling.

According to Amit Bansal, the founder of BharatLoan, a non-banking financial company, "a salaried individual with predictable income is often seen as more stable than a self-employed co-borrower with fluctuating earnings." He suggests nominating the person with "a more consistent income and stronger credit history" to make approval smoother.

Impact on Credit Scores

Every EMI you pay, or miss, the loan statement shows up on both borrowers’ credit reports. The credit bureau does not distinguish between who was supposed to pay that month. Even one missed payment can drag down both scores, making future loans or credit cards harder to access or more expensive. What’s tricky is that even if one borrower is financially responsible, they can still see their creditworthiness suffer because of the other’s mistakes.

"Lenders assess the financial stability and repayment capacity of each applicant," Bansal points out, which suggests that both borrowers' repayment behaviour directly affects their credit profiles.

Strain on Personal Relationships

Money problems has a way of worsening personal tensions. A couple separating, partners falling out, or family members disagreeing over who pays what, can easily find the loan turning into a pressure point. The lender’s system keeps billing both names until the loan is closed, refinanced, or formally reworked. Without a written understanding on who pays which share, and what happens if that changes, the more financially stable person often ends up carrying the load.

Legal Consequences of Default

If EMIs stop altogether, recovery action does not pause for personal disputes. Depending on the product and security offered, the lender may impose late charges, mark the loan as overdue in credit bureaus, begin recovery proceedings, or enforce on collateral. Legal notices typically name all co-borrowers.

Changing a Loan After Signing

Many borrowers assume that if life changes, they can simply remove a name. In practice, altering the borrower set needs lender approval. The person staying on the loan must meet income and credit norms alone (or with a new co-borrower the lender accepts). Often the cleanest route is to close or refinance the old loan in the new borrower structure. It isn’t impossible, but it is paperwork-heavy and depends on eligibility.

A joint loan can help you reach the goal sooner, but it also links your finances with someone else’s discipline, stability, and choices. Talk through worst‑case scenarios before you sign: job loss, relocation, separation, illness. Keep records of who pays, build an emergency cushion, and revisit the arrangement if circumstances change.