Is It Possible To Get Two Personal Loans At The Same Time?
Can someone get two personal loan? Read to know when you can get multiple personal loans & also what else alternative can be opted!
Financial needs may occur anytime, and often when one least expects it. In such situations personal loans are perfect for those who need money without too much of a hassle. But what if one has an existing personal loan and wants to take a second one? Do lenders allow a second personal loan?Well, it is possible to get a second personal loan. But to avail that borrowers must first meet the eligibility criteria like income, existing debts, credit score, etc. Also, most lenders prefer to see a debt-to-income ratio under 30% or so.
Borrowing more than one’s limit can be a burden. Hence, a second loan, if not managed correctly, can drag the borrower into a debt trap. Here are some points one should keep in mind before taking out another personal loan:
• Debt Cycle:A second loan means a significant increase in debt and sometimes a default. It usually happens if liabilities are greater than net income. Though initially a second loan may seem to be a practical solution to deal with an existing financial problem, it in due course may lead to a cycle of never-ending debt.
• Higher Rate Of Interest:Multiple loans means increased liability. To reduce the risk of default, banks may sanction the second personal loan at a higher rate of interest.
• Credit Score:The credit score is a key factor that lenders consider whenever one applies for a loan. Higher the score, the better are the chances of seeking a loan approval on favourable terms. The credit score is dependent on credit history. So, borrowers planning to take a loan must have a clear track record of repayment.
Another important fact to remember is the debilitating impact of loans on the credit score. Multiple loans taken from banks during the same period translates into a number of hard inquiries and a hit on the credit score. So, it is wise to space out loans as much as possible so that the credit score is not impacted.
Taking Two Loans From The Same LenderLending policies usually vary from one lender to another. Most lenders do not sanction a second personal loan over an existing personal loan. So, borrowers planning to take a second personal loan must approach a new lender.
The new lender, like the previous one, will check the income, existing loans, etc. before approving the second loan. If the lender has concerns about the borrower’s repayment ability, it may turn down the loan application.Some lenders may sanction a second personal loan over the first loan. But then again, the terms and conditions on a second personal loan may vary from lender to lender.
For borrowers facing a rejection of a second personal loan here are a few alternatives they can avail:
• Personal Loan Balance Transfer:This allows borrowers to transfer the outstanding loan amount from one bank to the other and to negotiate for top-up personal loans.
• Debt Consolidation Loans:This helps to consolidate or replace multiple loans into a single debt and pay a single EMI every month. The biggest advantage of debt consolidation is that borrowers need not keep track of multiple EMIs, thereby reducing the chances of missed payments.
• Loans Against Securities or Overdraft Facilities:This can be a good way to reduce interest on a second loan.
ConclusionPersonal loans are great tools to finance all personal, and even some professional, needs. There are no hard rules confining borrowers on loans they can take out simultaneously. However, a second loan demands timely payments of EMI just like the first loan. Sometimes lenders consider one ineligible for a second loan if they are not convinced of the borrower’s ability to fulfil multiple debt obligations on a regular basis.
Borrowers should first check if they have enough of the total monthly income remaining after their debt payments to finance other essential expenses.IIFL Finance understands the financial needs of every borrower. Its customised deals offer instant solutions to ease all financial worries and accomplish all aspirations. Borrowers at IIFL Finance can check the eligibility online and apply for a loan as per their convenience. To determine the eligibility for a personal loan, borrowers need to give details of the existing EMIs, income, age, interest rate, and tenure.