Yes, you can! Taking a personal loan and education loan simultaneously is possible. The approval for the same will depend on factors like:
- Previous loan repayment history
- CIBIL score
- DTI ratio
Factors to consider before applying for both types of loans simultaneously
If you have already availed of education financebut need more funds to meet additional expenses, opting for a personal loan for educationcan help. Here are few things to keep in mind before approaching your preferred lender.
#1 Consider your debt-to-income ratio
Lenders check your debt-to-income or DTI ratio before approving your loan. DTI ratio is calculated by dividing your current debt repayments by your total income. Here, if a major chunk of your income is being spent on meeting monthly debt obligations, you have a high debt-to-income ratio.
If your DTI ratio is over 35%-40%, the lender may perceive you as inept to pay new EMIs. A high DTI ratio lowers your loan approval chances, and the lending institution can charge you a higher interest rate.
Additional Read: Debt-to-Income (DTI) Ratio: Know Why Is It Important?
#2 Be mindful of interest rates
When you opt for both education and personal finance together, whichever loan you apply for second will likely come at a slightly higher interest rate.
In a nutshell, if you apply for a study loan first, the personal loan will likely come with a relatively higher ROI and vice versa. So, you must compare various loan offers, discuss with lenders, and negotiate the loan terms before applying.
#3 Check your CIBIL score
Before your loan application is approved, lenders review your CIBIL or credit score. This score lies within a scale of 300 to 900 points, and the closer you get to 900, the higher your chances of loan approval at more attractive interest rates. Here, a high credit score indicates a health repayment history and improves your personal loan eligibility.
If your CIBIL score is high, ideally 750 or above, chances of simultaneous loan approval at lucrative interest rates go up significantly. Before approaching your lender, run frequent checks on your credit report to get rid of any errors or discrepancies.
Additional Read: All You Need to Know About CIBIL Score
#4 Check for additional charges beforehand
If you are taking two loans simultaneously, you will likely pay a one-time processing fee on both. There may be other charges associated with both your loans, like prepayment penalties, foreclosure charges and more. Check for additional expenses, if any, before signing the loan agreement.
Choose a lender that foregoes these costs, especially if you will service two loans simultaneously. With Tata Capital, you pay zero penalties on part prepayment after 6 months from taking the loan.
The bottom line
Are you looking for a reliable lending institution to help you with personal and education finance together? Turn to Tata Capital!
We extend education and personal finance at attractive interest rates, with minimal paperwork and customisable repayment terms. If you wish to calculate your monthly instalments before applying for the loans, click here to use our study loan EMI calculator and here to use our personal loan EMI calculator. Apply with us today!