Taking the next steps in life with your partner can be exciting and daunting. Buying a house, setting up joint accounts, and generally splitting everyday costs are all part of building a future but can be stressful too.
Many people are not aware that it's also possible to take out a joint car finance agreement. Much like a mortgage, you're both responsible for the payments, which can be beneficial when you're already sharing the costs of everything else.
You both may already have your own car, or perhaps you are already sharing one car, but it's under just one of your names. If you both own one, maybe you have realised that you only need one, and two cost you too much money.
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Or if you only have one and are sharing it, perhaps you wish to share the burden of the repayments from your joint account, rather than one of you paying for it all themselves or the other having to transfer money each month, which can get messy.
Either way, we can help you understand if getting a joint car finance agreement is a good idea for you, your needs and budget, and how you should proceed.
Is it possible to apply for joint car finance?
It most certainly is possible. However, one thing to consider is that not all car finance lenders approve this type of loan, so if you're 100% certain it's the type that's best for you both, it's worth digging into who can offer it to you.
Who can I apply for joint car finance with?
You can apply for joint car finance with whoever you wish, but it's generally better suited for married couples or partners that already have other loans together, such as a mortgage.
Some lenders will only allow this type of finance to partners living at the same address, so it's most likely off-limits to any partners that live separately.
How does the joint car finance application work?
Firstly, one of you will want to submit a solo application to apply for car finance with a lender that accepts a joint application, rather than together initially. You will be asked to submit the details of the second person to be on the agreement.
Even if a lender accepts joint applications, there's a chance that you could still be rejected if you don't meet all of the following criteria:
- You're both over 18 years old
- You're both no longer in full-time education
- You're both UK residents
- You're living at the same address
What if one of you can't make the car finance repayments?
Regardless of the circumstances, you'll be required to make your monthly repayments. Failure to do so will negatively affect your credit scores, and you'll struggle to apply for future credit.
If you're both contributing to the monthly repayment and one of you can't make it, the other person will be responsible for ensuring that the monthly repayment is made to the lender.
Will a joint car finance application affect your credit score?
If you have a low credit score, it's advised to apply as joint applicants as your partner's credit score will be taken into account, and if theirs is better, it could help you secure the loan.
A joint car finance application won't affect your credit score more or less than applying alone. So if this is an option you want to take, you don't need to worry about credit scores, provided you're prepared and able to make your repayments on time.
A way that your credit score could be affected is if you make too many applications in a short space of time. Hard credit checks appear on your credit report and could be a negative indicator to future lenders.
You could look at pre-approval loans where lenders perform soft searches on your credit history to find deals you will be approved. You can then shop around for the best deal that suits you.
Can the car finance be in both of your names?
On paper, you will have the first and secondary as opposed to both being responsible for the car. You can only have one registered keeper, but that's predominantly due to one person needing to be the point of contact for offences, parking tickets, etc.
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Can I get any car finance on a joint application?
A joint car finance application is generally available on all types of agreements, including:
We have created a guide on the pros and cons of each finance type.
The advantages of joint car finance
- Better chance of approval as your partner may have a better credit score than you or vice versa.
- Your income gets combined, giving you a higher amount than if alone and will stand you in better stead even if you have a poor credit score.
- You and your partner will be legally responsible for the payments, so you'll both pay less than if you were purchasing alone.
The disadvantages of joint car finance
- You'll both take on the debt that comes with the loan and be responsible for each other.
- If you missed a payment, both credit scores would be affected.
- If you were to break up, you'd still be required to make the payments which could be extremely awkward and difficult to decide who keeps the car.