How Does Joint Car Finance Work?

Sometimes, it’s better not to go it alone.
Joint car finance is a type of loan that you apply for with another person, usually your partner or family member.
The loan will be in both your names and can be a good option if you – or your co-signer – has a poor credit score or limited affordability so might struggle to secure finance on their own.
But, as their name suggests, joint loans form financial links between you and another person.
You’ll both be responsible for making the repayments and both your credit scores can be impacted by how well you manage the loan so it’s important you only make this commitment with someone you trust to fulfil their end of the deal.

Here at Carmoola, we don’t currently offer joint car finance.

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How does a joint car finance application work?

If you’ve decided that teaming up and taking out a joint car loan is the right option for you, it’s time to apply.
Most car finance journeys start with an online application form – and joint finance is no exception.
One of you will usually need to supply your details first. You’ll then be able to share information from the second applicant at the next stage in the process.
Both of you will likely undergo a soft credit check and an affordability assessment. These allow lenders to offer you a deal that’s appropriate for your combined circumstances.
Once the contract is signed by both borrowers, you’ll be jointly responsible for making the repayments throughout the agreed loan term. This doesn’t have to be a 50/50 split; as long as the full payment is made each month, how much you each pay individually can be decided between you.

Am I eligible for joint car finance?

As with any other type of finance, joint loan approvals will be dependent on each lender’s individual eligibility criteria. While each lender can look at different factors, they’ll usually consider your combined income and affordability as well as your individual credit scores and payment histories.
Some lenders can only accept joint applications from people who live at the same address, others will only offer loans to cohabiting partners, and others might require that your joint income is above a certain threshold.

Who owns the car in a joint car finance agreement?

With a hire purchase (HP) or personal contract purchase (PCP) agreement, the finance is secured against the car. This means the lender will be its legal owner during the agreement term.

Once the loan ends – assuming you’ve made all the payments and decided to pay the one-off balloon payment in a PCP – you’ll both become the car’s joint owners.

However, only one of you can be its registered keeper. Typically, this should be the car’s primary driver as that person will also be responsible for paying the road tax, getting the vehicle through its MOT, and dealing with any motoring offences like parking penalties or speeding fines.

More car finance guides

Is joint car finance right for me?

Joint car finance isn’t for everyone, but it could be the right choice for you if:

  • You have a poor credit score and are struggling to get a loan on your own
  • You have a low income or limited affordability
  • You have complete trust in your co-signer
  • You’re happy to share a car

It might not work out so well if:

  • You can’t afford to cover the repayment if the other person doesn’t pay their share
  • You’re concerned about being financially linked to someone with a bad credit score
  • You want to be the car’s only legal owner
  • Your relationship with your co-signer is unpredictable

What are the pros and cons?

Sounds good so far? Let’s go through a few of the advantages and disadvantages of joint finance deals to help you make up your mind before you sign on the dotted line:


Pros of joint car finance

  • Your eligibility might improve if the other person has a strong credit score
  • You could split the cost of buying a new or used car between two
  • You’ll have a higher combined income and improved affordability meaning you might qualify to borrow a larger amount or buy a more expensive car
  • You could boost your credit score over time if you keep up with the loan repayments

Cons of joint car finance

  • You’ll both be jointly responsible for making repayments – known as joint liability
  • You’ll be financially linked to the other person
  • Both of your credit scores will be impacted if a payment is missed
  • Your relationship could be affected if one of you stops making payments

Joint application vs. guarantor finance - which is right for me?

If you’re looking for car finance options for people with bad credit, you’ll likely have come across guarantor finance.

Like joint loans, this type of finance can help people get approved for car finance even if they’ve missed payments in the past or never had a credit agreement before.

The big difference between joint applications and guarantor finance is that you won’t both be co-signers on the loan. Instead, the loan will be in your name only.

A guarantor is someone who agrees to step in and make your finance repayments if you don’t. They usually need to have a good credit score and some lenders will also ask that they’re a homeowner and aged 21.

A guarantor loan might be a good option for you if you’re struggling to find an approval but have a close friend or family member willing to act as the guarantor.

You won’t benefit from the extra income and potential affordability boost that can come with having two people jointly responsible for a loan, but the finance will be in your name only and could help you improve your credit score over time.

FAQs About Joint Car Finance

Can I get joint car finance with a bad credit score?

Nobody’s perfect. If you’ve made late payments in the past or had a debt management plan like an Individual Voluntary Arrangement (IVA), you might have a bad credit score.
That’s where joint car finance can help. While there are no guarantees and lenders will consider more factors than just your credit score, making a joint application with someone who has a good or excellent credit score could improve your chances of securing a loan.

Can I get joint car finance on benefits?

If you need car finance to help you buy a car but you’re claiming benefits, that doesn’t mean it’s the end of the road. You may be able to qualify for joint car finance if you’re receiving benefits like personal independence payments, carers allowance, or disability living allowance.
Typically, you’ll need to have a benefit income of at least £1,000 to qualify for a loan but teaming up with an employed person could help you boost your affordability thanks to your combined income.

Can we get joint car finance as a couple?

Yes, it’s possible to get joint car finance if you’re coupled up. But keep in mind that car loans are a big commitment and can last several years so if your relationship is relatively new or a little rocky, a joint deal might be a risk.
If you break up, you’ll still be jointly responsible for paying back the finance. You may also find that some lenders require couples with joint loan to be married or living together.

Can I add someone to my car finance agreement?

Once you’ve taken out a car finance agreement as an individual and signed the contract, it’s usually not possible to add someone new to the contract further down the road. That’s because the terms of your loan will only be based on you: your credit score, your income, and your payment history. Adding another person to the loan means it might not be fit for purpose anymore.
Don’t panic; if your circumstances change and you’d like to switch to a joint loan, there are options available.
You might be able to refinance your current loan with a new joint agreement or end your loan early by paying the settlement figure and selling the car. If you’re struggling to make payments, you can also opt for voluntary termination at any time, but you’ll need to make sure you cover at least 50% of the total amount payable.