Can You Get Two Personal Loans At A Time?

Life is unpredictable, and sometimes one loan just isn’t enough. Maybe you took a personal loan for medical expenses, but now you need a second loan for urgent home repairs. Or perhaps you’re already repaying an education loan and need extra funds for travel. So, you must be wondering, can you have more than one personal loan? 

Yes, you can! But it depends on factors like your income, credit score, and existing debt. Lenders will assess whether you can handle multiple EMIs without financial strain before approving a second loan.  

In this blog, we will break down how having multiple personal loans works, what lenders look for, and whether it’s the right move for you.

What are Multiple Personal Loans?  

Multiple personal loans means having more than one loan active, either from the same lender or from a different lender. Many people opt for multiple loans to cover varied financial needs like medical emergencies, home renovation, wedding expenses or even debt consolidation.  

For instance, Sumit took a personal loan of ₹2 lakh for medical expenses. A few months later, he needed ₹1 lakh for home repairs, so he applied for another loan. Since he was already repaying the first loan, he now has two active personal loans, increasing his monthly EMI commitments. 

Managing multiple personal loans requires careful financial planning to avoid excessive debt and repayment issues. 

Factors Lenders Consider for Multiple Loans

It is possible to get multiple loans, however, it depends upon lender terms and your credit profile as a borrower. Here are the key factors that lenders consider before they approve another loan:

Credit Score: Maintaining a high credit score ensures the lender sees you as a responsible borrower who makes timely repayments and has a good credit history.

Existing Debt: Lenders will assess how many active loans you currently have. If you’re juggling multiple loans, it could raise concerns about your repayment capacity. However, having an older long-term loan that you’re still repaying while applying for a smaller short-term loan may be viewed differently. A lot will depend on the borrower’s profile for another loan approval.

Income Source: Lenders check your current monthly income to determine your repayment capacity. If the salary is enough to cover both loans without straining the borrower, then one is more likely to get approved for another loan.

Loan Type & Tenure: Whether the loan is secured, unsecured, short term or long-term is considered while approving the loan. For instance, if you already have a long-term home loan with a high EMI, a lender might be cautious about approving another large loan, like a car loan. However, if you’re applying for a short-term personal loan with a smaller EMI, they may be more flexible. The type and tenure of your existing loans help lenders assess your overall repayment capacity. 

Employment Status: If you have a steady job with a high-income source, it assures the lender that you can make timely payments and can comfortably manage multiple loans.  

Impact of getting multiple loans at the same time  

Taking multiple loans at the same time can have both positive and negative impacts on your financial profile. Here’s what you need to consider:  

Positive Impact: 

Fulfils Urgent Financial Needs: If used wisely, multiple loans can help cover urgent expenses like home purchases, medical bills, or other emergency needs.  

Improves Credit Mix: A combination of secured (home, car loan) and unsecured (personal loan) credit can boost your credit score if managed well.

Builds a Strong Credit Profile: Timely payments on multiple loans build a solid credit history and credit score over time. 

Potential Negative Impact: 

Higher Debt Burden: Managing multiple EMIs can strain your finances, increasing the risk of default. 

Reduces Future Loan Approval: If you have multiple loans, lenders may hesitate to approve additional loans if your debt-to-income (DTI) ratio is high.

Higher Interest Rates: If lenders see you as a high-risk borrower, they may charge higher interest rates on new loans, to mitigate the risk.  

While multiple loans can be helpful, they should be taken with careful planning to avoid financial stress. Always assess your repayment capacity before applying. 

Personal Loan Interest Rates on Multiple Loans  

You can take a second personal loan, but it may affect your interest rate. Lenders assess your income, credit score, and repayment history to determine the rate of new loans. Here are key factors that influence interest rates on multiple loans: 

Higher Interest Rates Due to Increased Risk: When you apply for a new personal loan while still repaying existing ones, lenders may view you as a high-risk borrower. To cover this risk, the lender may charge a higher interest rate on your new loan compared to your first one. For instance, if your first loan was approved at 11% interest, your second loan might be offered at 13-15%, depending on your creditworthiness and repayment behaviour.  

Credit Score Impacts Interest Rate: A strong credit score (750+) signals responsible borrowing behaviour, increasing your chances of getting a personal loan at a better rate. However, if your score drops due to high outstanding debt, the lender may increase this interest rate or even reject your application.  

Debt-to-Income (DTI) Ratio: Lenders evaluate your Debt-to-Income (DTI) ratio, which compares your total monthly EMIs to your income. A DTI above 40% raises red flags, as it indicates a higher financial burden.  

Loan Type & Lender Policies: Interest rates for multiple loans also depend on: 

Lender Type: Interest rate also depends on the lender. A bank may offer lower rates to existing customers, while NBFCs may approve loans more easily but at slightly higher rates.

Loan Tenure: Short-term loans (1-2 years) often come with higher interest rates than long-term loans (5+ years).

Repayment History: If you’ve been paying your current EMIs on time, lenders may offer a second loan at a reasonable rate.  

To avoid unnecessary debt stress, evaluate your repayment capacity and explore all options before applying. A well-planned borrowing strategy can help you manage multiple loans without overpaying interest. 

Pros and Cons of Taking Multiple Personal Loans

Taking multiple personal loans can be helpful in certain situations, but it also comes with risks. Let’s weigh the pros and cons: 

Pros of Multiple Personal Loans 

Access to More Funds: With multiple personal loans, you have access to a significant amount of funds to cover urgent financial needs.

Improve Credit Score: If you make timely payments, you will eventually build a good credit history and good credit score. 

Quick Loans: The application and disbursal with personal loans is quick and easy. And with lenders optimizing for the digital landscape, loans can be applied online or on apps, making them a convenient loan option.

Flexible Usage: Personal loans can be used for varied purposes like medical bills, education, or home repairs. 

Cons of Multiple Personal Loans 

Higher Debt Burden: Multiple EMIs increase the amount that goes towards paying those EMIs, which can increase your financial strain.

Lower Loan Eligibility: Having multiple existing loans can make it harder to get approved for new ones, as lenders may see you as a higher risk. This can reduce your chances of securing future loans.

Risk of Default: Juggling multiple loans that have different due dates may increase your chance of default. You may face penalties and a negative impact on your credit score. 

Higher Interest Costs: Managing multiple loans may result in higher overall interest payments.  

Multiple loans can be useful if managed wisely, but it is important to assess your repayment capacity before borrowing.  

Tips for Managing Multiple Personal Loans 

Managing multiple personal loans can be overwhelming but with the right strategy, you can efficiently manage your finances. Here are some smart tips to manage multiple loans:

Prioritize High-Interest Loan First: When you have multiple personal loans, pay off the loans with high interest first. You can pay off the high-interest loan first while paying the minimum amount for the lower-interest loans. 

Opt for Debt Consolidation: If juggling multiple loans feels overwhelming, debt consolidation can help. It combines all your existing debts into a single monthly payment, eliminating the hassle of tracking multiple due dates. This makes managing your debt simpler and more organized.

Utilize Bonuses or Extra Income: During your loan tenure, if you receive any bonus, increment or earn extra income, utilize it to pay off the debt.

Opt for Prepay Option: If the lender has a prepayment option without any additional fees, try to clear off the loan earlier to save on interest. 

Also Read: Loan Repayment Schedule | Loan Amortization Calculator

Conclusion  

Yes, you can get two personal loans at the same time, but it’s important to assess whether it’s the right financial move. Before applying, ensure you have a stable repayment plan in place. If juggling multiple EMIs feels overwhelming, consider alternatives like debt consolidation or exploring lower-interest financing options. Borrow smartly and only take on additional loans if you can comfortably manage repayments without straining your finances.