Life can be unpredictable at times. It might happen that when you’ve opted for personal finance to buy the latest iPhone, your squad decides an impromptu trip to the Maldives. Hence, at such times, even though you’re already under debt from the previous personal loan, you may need to opt for another one. Because let’s face it: One’s got to live, right?
So what can you do? Can you have more than one another personal loan at a time? Well, yes!
However, there are numerous things that you should keep in mind before deciding to tackle multiple personal loans at once. Here they are:
Though they are a good option, especially when it comes to financing emergencies and unforeseen situations, taking multiple loans for personal reasons is sure to strain you one way or the other financially. When you have numerous loans to your name, you’re committing to several monthly payments.
As a result, a considerable chunk of money will be utilised in repayments, leaving you little capital for other essential things in life. Moreover, the fact that you have more than one obligation to take care of could put you at an increased risk of defaulting on your debt.
Hence, calculate your EMI schedule beforehand using a personal loan EMI calculator.
Additional Read: Easy Financial Planning with a Personal Loan EMI Calculator
Having multiple loans can be an excellent way to improve your credit score. However, the credit score balance will tip in your favour only if you’re regular on your repayments.
But as discussed earlier, the financial strain can push you to the edge while paying back. Also, if you don’t possess an already good enough credit score, no lender will be willing to offer you even a single loan, let alone two at a time. Even if you somehow manage to get a second loan, it will surely shave off some points from your existing credit reports.
So, either you’ll not be forwarded a second loan, or the personal loan interest rates on the second one will be sky-high.
Therefore, work out your personal loan eligibility beforehand, and preferably, with multiple lenders.
Assets and liabilities
It is no secret that your assets must exceed your liabilities, especially when you’re looking for multiple loans. Having a good asset profile will provide you with extra cushioning to fall back on in case you’re running short on monthly payments. Also, having a good idea about your financial liabilities will help you assess your capacity to take more loans and repay them.
Equated monthly instalments from both your current loan and the new one you’re applying for will be factored in when the lender evaluates affordability. Ergo, your debt-to-income ratio must be low enough, or your application will be rejected. Usually, if more than 40% of your income is utilised for loan repayments, then lenders might hesitate to give you finance.
Therefore, plan judiciously before applying for a second loan.
Are you looking for a second loan to finance an unforeseen purchase? Look no further, because we at Tata Capital have affordable personal loans for self-employed tailored to your needs. By opting for our loans, you can enjoy services like swift disbursements and flexible tenures.
Get in touch with us today to begin your personal finance journey.