How Many Personal Loans Can I Have at a Time?

Personal loans are quite an easy, convenient way to meet financial needs. You can use them to meet so many of your major expenses. People are usually given personal loan for weddings, home renovations, or some unexpected financial requirements. In fact, now there are ways to make the process quick, thereby helping you meet your urgent needs too.

However, the question is – how many personal loans can a person borrow at a time? As per Indian Laws, there is no restriction on this, but your ability to get more than one or more loans, varies depending on some factors.

As per the Reserve Bank of India

As per the RBI's recent changes, people seeking multiple personal loans will not find it an easy task. The RBI has made it compulsory for the lenders to update the credit records every fortnight. While this used to be monthly earlier, the new development is making borrowing difficult. Hence, the lenders now have to report the borrowers' activities twice a month and not just once.

With the new rules in place, borrowers using multiple loans to hide their financial incapability will no longer be able to do so any longer.

Multiple Personal Loans – Pros

When you have made up your mind to avail more than one personal loan, do it wisely and sincerely to make the most out of it.

• Good Amount of Funds: You get more funds to fulfil your financial requirements when one loan does not serve the purpose.
• Debt Consolidation: When paying off the hefty credit card bills or some costly loans becomes difficult, you may use an additional personal loan to get the repayments simplified.
• Enhanced Flexibility: Multiple loans give you additional flexibility to use the money in the best possible manner, and also in your customized way.

You may also like "Understand the Risks Tied to Personal Loan Before You Borrow"

Multiple Personal Loans – Cons

There are certain drawbacks also as multiple loans bring some challenges too:

• Increased Debt: With multiple loans borrowed, you also increase the burden on yourself of the repayments.
• DTI Ratio: The ratio between the debt and income also rises considerably, thereby making it tough to get loans in the future.
• Complex Schedules of Repayments: It is both confusing and hard when you have to pay multiple EMIs every month. There can be delays or missed payments, affecting your creditworthiness.
• Defaults: When you end up borrowing more than what you could handle, there are high chances of making defaults.

What Do Lenders Consider Before Approving Another Personal Loan?

Lenders usually evaluate following items before approving another personal loan,

• Your total EMI burden (should ideally remain under 50–60% of monthly income)
• Your credit score (700 or more is preferred)
• Your repayment history and existing liabilities A clean track record and stable income improve your chances.

Applying for Multiple Personal Loans? Here Are Some Factors to Consider

Consider the following before going with more than one personal loan:

Interest Rate: Compare the interest rates beforehand and make selections to best suit your personal loan needs. Make sure you get the best deal. Also, prefer the lowest possible rates, as that does not increase the repayment burden to very high levels.

Tenure: Based on the tenure chosen for each loan, the EMIs are also decided. Longer tenures shorten the EMIs, but also increase your overall interest payouts. Shorter tenures make you pay higher EMIs in less time. Balancing is important to align the tenure with your ability to repay.

Charges: Make sure to go through the processing fees and other charges. There may be some prepayment penalties and late payment fees charged. Also check for any hidden fee to control the total cost you pay for the borrowing the loans.

Monthly Burden: Now that you know that you will be paying more than one EMI every month, see to it that making the repayments is within your capacity. See that your repayment monthly amount does not exceed 40-50% of what you earn in a month's time.

Credit Score: When opting for over one personal loan, know that you will face hard inquiries with each application. This can lower your credit score. While overall debt rises, chances of default also increase when the income remains as it is.

Understanding Loan Eligibility: We've discussed the DTI ratio. Know that banks generally approve you loans that amount to 6-8 times of your monthly income. Having touched the threshold, you might not be allowed to get any more personal loans.

Purpose of the Loan: Lastly, take loans only when they are necessary, also, based on what your goal is. It is wise to prioritize needs like weddings, education, medical emergencies and home renovations.

FAQs

Can I have more than one personal loan at the same time?

Yes, you can hold multiple personal loans simultaneously. There is no legal restriction on the number of loans you can take. However, lenders assess your repayment capacity, credit score, and existing debt before approving additional loans.

How many personal loans do banks usually allow?

Most banks allow up to two or three personal loans at a time depending on your income and creditworthiness. More than this may raise queries and reduce your chances of approval.

Will having multiple personal loans affect my credit score?

Yes, it can affect. Applying for several loans in a short period leads to multiple hard inquiries which may temporarily lower your credit score. Additionally, managing multiple EMIs increases the risk of missed payments which can further damage your credit profile.

Is it better to take one large personal loan or multiple smaller ones?

If possible, opt for a single larger loan with favorable terms. Multiple loans can complicate repayment and increase interest costs. However, if your needs are varied (e.g. medical, home renovation, wedding, etc.), separate loans with tailored tenures would be good.

Recent article "Borrow Better with Top Personal Loan Alternatives"

More Latest Articles

Upcoming Bank Holidays

Find More Useful Links