Life partners aspire to share their dreams and aspirations. Car ownership accounts for the most anticipated one. It is challenging to afford a car with an upfront payment. Saving enough amount, given other liabilities, is difficult. Thus, individuals consider shared car ownership. However, only one person out of two can be a primary owner. This is because you can register only 1 name in the V5c document.

Thus, splitting the costs of purchasing a car is affordable. It reduces the burden on both individuals. You can manage other expenses without being troubled by a car loan. The blog discusses the benefits and challenges of co-owning a car. It may help you whether you should go for it.

What does it mean to co-own the vehicle?

Co-owning the vehicle means paying an equal share of the loan. You and your partner will be equally responsible for paying the dues.  However, if one cannot, the other must settle the payment. It is an ideal option for individuals with a bad credit history and low income.  

Adding two incomes to the loan increases loan affordability. It thus helps the lender approve the loan. However, you can also consider it to reduce the burden of car ownership.  You can co-own the vehicle with anyone- like- a family member or a relative.

Who may qualify for a joint car loan?

Multiple aspects determine the application approval. It could be income, finances, employment history, heavy debts, etc. Different loan providers use their criteria to calculate affordability. At least one of you must hold a valid driving license and income to qualify.  Moreover, prove that you and your partner are together. It helps you get an instant quote.

Additionally, individuals with better credit scores and affordability get instant approval. If you both have good credit scores, you get approval. If one of you shares a poor credit profile, you may qualify. However, if both individuals share bad credit, the lender may reject the application. Here are other qualifications that you must meet to get a joint loan:

• You should both be a permanent UK citizen
• Should have income above £10000/month
• Should have low liabilities or debts
• 3 years of permanent residential history
• A fair UK driving license

When should you co-join a car loan with someone?

Deciding this depends on multiple factors. The first factor is the trust you have in the other person. Can you rely upon the individual with finances? Is he credible enough to carry the payments responsibly?

A car loan is a long-term commitment. Thus, choose the person responsibly. The individual must have a regular income with enough flexibility to support the payments. Here are other reasons to co-join the car with someone else:

a)      You have poor credit and cannot qualify

Individuals with pending payments, CCJ, and credit card defaults may struggle to qualify. The loan providers consider their profile as unreliable. Thus, they demand a guarantor or co-signer. A guarantor only helps if the borrower cannot pay.

However, a co-signer is equally responsible for settling the dues.  The co-signer with good credit, permanent residence and income qualify. You may get joint loans online from direct lenders easily. The verified profile reassures the provider of the timely payments. Moreover, high income and low liabilities reduce interest costs. Thus, co-signing with a person deducts the overall amount to pay the loan.

b)      You don’t want to disturb other goals

Yeah, it could be one reason to co-share a loan. Every individual holds multiple dreams. You may not want to invest 80% of your savings in a car purchase. Instead, dedicate some share towards other goals, too. Thus, splitting the costs of car ownership grants that flexibility. However, your partner must be comfortable to help you.

c)       You are happy to share the car

There should be a mutual agreement to share the car. If you want to drive it solely, avoid the loan. It may not be ideal for you in that case. Alternatively, if you share mutual understanding and cooperation, consider it.

d)      Can repay the other’s share (if he cannot)

You cannot deny this responsibility once you sign the joint agreement.  Entering jointly means you both are responsible for the loan. If the financial circumstances change, you must settle the dues. Consider the joint agreement only if you can afford the other person’s share if he cannot afford it.

e)      Not concerned about financial uncertainty

Entering jointly on a car loan demands commitment. Defaulting or missing payments may land you in trouble. It affects the credit scores of both persons involved. Moreover, one of you with a good credit rating may suffer a credit jerk. It is one of the risks of partnering with someone with low credit. Moreover, you don’t get the car either if you default. So, factor in this aspect before applying jointly with someone.

5 Tips to handle the joint car loan successfully

It is better to know your options, pros, and cons before booking your car jointly. It will help you avoid the hassle later. Not having sufficient documents may lead to delay and ultimate rejection. Here are some tips to manage the joint car loan without worries:

1)      Provide relevant bank accounts

Having relevant bank accounts is the prime condition for eligibility. It should be country and citizenship-specific. Moreover, avoid providing a business bank account for the car loan. It is because you want to buy the vehicle for your personal needs. Check the details and update us if any changes are required.

2)      Ensure a valid driving license

You may not get a car loan jointly without one. At least one of you must have a relevant driving license. No, a learning driving license may not be valid. One of the persons should have a permanent driving license. It helps the lender verify your driving expertise.

3)      Set direct debits on payments

Ensuring regular monthly instalments is critical to get the car later. It helps you reduce your liabilities and complete the loan timely. Most individuals struggle to save enough. It could be due to forgetfulness or lack of budget. You both know your share of the loan. Thus, direct debits are set for the payments. It helps you pay the dues timely without inviting penalties. Moreover, some loan providers may provide certain concessions when choosing direct debit as a payment mode.

4)      Coordinate payments well with the partner

Ensuring the best communication is essential in any loan agreement. Moreover, a car loan is a long-term commitment. Thus, review and discuss financial changes. It helps you know the other person’s financial affordability. Accordingly, you can include flexibility in your finances to save extra. It prevents you from missing the payment and losing your dream car. 

5)      Discuss the condition with the loan provider for help

Contact an expert if you struggle to spot any solution to your financial situation. Your loan provider may help arrange the best solution. Don’t delay discussing the issue with him. It will only hamper the progress and affect your car ownership dream. 

The expert may analyse your current situation and finances. He may modify the current repayment plan and provide you with an affordable term. Alternatively, he may help halt the interest and other payments for some time. You must take the initiative to contact the lender after or before missing the payment.

Bottom line

Co-owning a car grants equal rights to both partners in the car ownership. It is an ideal arrangement for couples seeking car purchase. You may split the costs by entering into a joint loan agreement. However, the V 5 logbook remains in just a person’s name. It could be the primary borrower. Discuss your options with the partner and evaluate affordability. Check whether you can make timely payments. If yes, then a joint loan may be apt.