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| Personal Loan |
Sometimes, a financial emergency requires individuals to look for all the available funding options. A Personal Loan is one of the best options to avail of quick funding. Now, with each bank, the types of Personal Loans vary, and the deals offered may be pretty unique.
If the loan amount provided by one bank is insufficient, it is possible to apply for a second loan with another bank simultaneously. However, there are some essential things that you should consider before you apply for loans from different banks.
Points to Consider for Multiple Personal Loans
If you already have an existing loan, such as an SBI Personal Loan, you can apply for a top-up from your bank or choose a second banking institution. However, there are some essential pointers that you need to consider when you are applying for a second Personal Loan:
#1. It Affects Your Credit Score
Each time you take a loan, your credit score gets affected. It drops with every loan that you take. So, if you are looking for a second loan, it is necessary to understand that it will affect your credit score and any other credit option you are looking for. For example, if you wish to get a Credit Card, it may be difficult with an existing personal loan. The only way to balance your credit score is to maintain an excellent repayment record and exhibit other forms of financial discipline.
#2. Check the Eligibility Criteria
Before you apply for a second loan, make sure that you are aware of the eligibility criteria for the loan. The most crucial factor to consider is the debt-to-income ratio. If you already have an existing loan, a portion of your income is already blocked with the EMI that you pay towards that loan. For example, with UCO Bank Personal Loan, the net income should be at least 40% of the gross salary to get a personal loan. With this amount blocked, getting a second loan may be more challenging. Check the eligibility criteria before applying so your loan is not rejected. In case of a rejection, your CIBIL Score deteriorates further.
#3. Apply For A Second Loan Only After The First One Is Processed
Many times, customers tend to look for multiple options and then apply for one loan. It is essential to note that using Check Personal Loan Eligibility Online or other tools too often can affect your credit score. It is a good idea to seek advice from the bank directly and check various factors like:
- The loan amount available
- The eligibility criteria
- The tenure provided
- Interest rates
- Disbursement time
Once you are sure you will qualify for the loan, apply for one. You should look for a second loan only after this application has been approved. Even in the case of the second loan, make sure that you check with the bank directly. With most loan options, you can avail of the loan officer's services, who will provide you with all the details you need.
#4. The Second Loan Amount Is Usually Lower
Usually, a second loan amount may be less than you expect. This is because you already have a lower credit score and also because a portion of your net income is blocked already. It is also much easier to get a second loan if you have the necessary payment and the documents you need to process it.
Try Other Options
You can get multiple personal loans if you need money for any immediate financial obligation, such as education, medical emergencies, wedding expenses, etc. However, given the fact that the chances of approval are slim and that it may affect your credit score, it is a good idea to try other options:
- Get a higher amount from the same bank: When applying for your second loan, look for options to get a better deal from the bank. Some secured personal loan options will help you get a higher loan amount and a lower interest rate as well. This is the best option available as you must apply just once and only repay a single EMI each month.
- Look for Top-up Loans: With both personal and home loans, you can apply for a top-up loan. This allows you to get an additional loan over the existing loan. The loan's interest rates and conditions will remain the same as the previous loan. You will also only have to pay a single consolidated EMI. If you have a personal loan, use any free personal loan eligibility calculators online to check how much top-up loan you can avail of.
Maintaining A Good Credit Score
Maintaining a good credit score is a must to ensure that you are prepared for any future financial emergency. This will also help you get multiple loans despite your income being blocked with the first loan. Here are some tips to keep your CIBIL Score High:
- Make sure that you make all the repayments towards existing credits consistently and timely.
- The credit utilization ratio is the ratio of the credit limit sanctioned to you and the credit amount used. Have a credit utilization ratio of 30-35%. A very high credit utilization ratio can hurt your credit score drastically.
- Have a good balance of secured and unsecured loans. Having too many unsecured loans will lead to a lower CIBIL score.
- The lower the outstanding credit, the higher your CIBIL Score. So, it is a good idea to repay your loans as quickly as possible. It is also advisable to choose shorter loan tenures whenever possible.
