CAN YOU APPLY FOR TWO PERSONAL LOANS AT ONCE?
Introduction
One of the easiest financial instruments available to people looking for quick cash without collateral is a personal loan. A personal loan provides instant assistance with adjustable payback plans, regardless of the reason—a medical emergency, home remodeling, education, or a destination wedding. However, what happens if one loan’s amount is insufficient?
This leads us to a crucial query: Is it possible to apply for two personal loans simultaneously?
Yes, in a nutshell, but it depends on your creditworthiness, repayment ability, and financial profile. Everything you need to know about applying for multiple personal loans in India, the risks involved, and wise alternatives to take into account is covered in this blog.
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Is Having Two Personal Loans Legal?
Yes, applying for or receiving more than one personal loan is not prohibited by law in India. Banks and NBFCs are among the financial institutions that prioritize your ability to repay over the quantity of loans you have. But just because you can apply for two personal loans at once doesn’t mean you should, unless you’re eligible and have a strong repayment plan.
Why would you require two personal loans simultaneously?
There are good reasons to think about taking out a second personal loan:
The amount of your initial loan was not enough.
A fresh or pressing need for money has surfaced.
You have different objectives (e.g., medical + education).
You are juggling several obligations in a short amount of time.
If your financial situation permits it, having several personal loans may be the only sensible course of action in these situations.
Eligibility Criteria for Applying for Two Personal Loans
Lenders will consider a number of important factors if you intend to apply for two personal loans at once or if you currently have one and would like another:
- Credit History and Score
When it comes to loan approval, your credit score is crucial. Your chances of obtaining a second personal loan are increased if your score is above 750, which is regarded as excellent. Rejection may follow a low score, particularly following your first loan.
- Ratio of Debt to Income
One important metric that lenders use is the debt-to-income (DTI) ratio. The new loan and all of your other EMI payments should ideally not take up more than 40–50% of your monthly income. A high DTI is cause for concern.
- Track Record of Repayment
Lenders are more likely to approve a second loan if you have been making timely repayments on your current loan without any defaults or delays. Your credibility is damaged by late payments.
- Earnings and Employment Security
Lenders are more confident that you can handle several EMIs if your income is higher and steady. People who work for themselves might be asked to provide more proof of their financial stability.
- Current Debt Commitments
The total amount of outstanding liabilities and the number of active loans are examined. Your second personal loan application may be impacted if you have too many active credit lines, including credit cards.
The dangers of simultaneously having two personal loans
Applying for two personal loans at once might seem like a quick fix, but there are risks involved that you should carefully weigh.
- A higher burden of EMI
Two loans equate to two installments per month. This can put strain on your overall finances and lower your monthly liquidity.
- Increased Default Risk
Your credit profile could be harmed if you miss EMIs due to a drop in income or unforeseen expenses.
- A lower credit score
Your CIBIL score and future borrowing capacity are impacted if you default on or postpone loan repayments.
- Diminished Future Loan Eligibility
Having several loans at once may make it more difficult for you to get future credit, such as auto or home loans.
- Increased Interest Decrease
Your total interest liability rises when you take out two loans at once, particularly if they have long terms or high interest rates.
Is It Better to Apply to the Same Lender or a Different One?
Same lender: Your current lender might provide a pre-approved second loan or a top-up personal loan, frequently with reduced interest rates and quicker processing.
Different lender: It is possible to approach a new lender if your current one rejects your application or does not offer favorable terms.
When applying elsewhere, just make sure that your credit report appropriately reflects your current obligations.
How to Strategically Apply for Two Personal Loans
Use the following tactics if your financial circumstances necessitate taking out multiple personal loans:
Examine your credit report.
Get your credit report from Experian or CIBIL before applying. Make any necessary corrections to maintain a healthy score.
Make Use of a Loan EMI Calculator
Determine the total amount of your EMI debt. Make sure you can comfortably afford the new EMI each month.
Applications That Are Spaced Out
Do not submit two loan applications in the same week or on the same day. Your credit score may drop if you receive several hard inquiries in a short period of time.
Preserve lucid documentation
For seamless processing, have your identity documents, bank statements, proof of income, and current loan information on hand.
Substitutes for a Second Personal Loan
Think about safer and more affordable options rather than taking out two personal loans:
Loan Top-Up on Current Loan
A top-up loan from your present lender might be quicker, less expensive, and simpler than a new loan.
Loan secured by gold or a fixed deposit
Longer terms and lower interest rates are common features of secured loans, such as those secured by gold or fixed deposits.
EMI Facility for Credit Cards
Credit card EMIs may be a more straightforward option if your financial needs are modest.
Loan Consolidation
Consolidate all of your outstanding debts into a single, lower-interest personal loan with a single monthly installment.
conclusion
So, is it possible to apply for two personal loans simultaneously? Yes, you can, but you should plan ahead and be fully aware of your financial obligations.
You should never decide to apply for more than one personal loan in a hurry. While it may solve your immediate concerns, it can also place a long-term burden on your income and credit profile. Always balance the risks and rewards, evaluate your ability to repay, and, if required, look into other borrowing options.