Can You Get A Personal Loan While Paying Another? Here's The Right Way

Sudha is 29 years old. She is a private-sector employee. Her monthly income is ₹79,000. Last year, she took a personal loan of ₹3 lakh to buy a second-hand car. Her current EMI is ₹9,500. And she has 18 months left to repay it.

Now, she needs ₹2 lakh for house repairs after a recent plumbing issue. She is thinking about whether she can get another loan while still managing the first one. 

Well, the answer to this question is yes, it can be done. However, you need to meet certain conditions, and it must be done carefully to avoid overburdening your finances.

Is It Possible For You To Have Two Personal Loans At The Same Time?

Yes, lenders allow you to take more than one personal loan at a time. But your approval depends on things like:

• Your credit score
• Your ongoing EMI obligations
• Your past repayment behaviour
• Your monthly income

Things To Keep In Mind Before You Apply For A Second Loan

1. Check Your Total EMI Burden

Most lenders generally prefer that your total repayment is not above 40% to 50% of your net monthly income. But if your EMIs are too high compared to your earnings, your second loan could be denied. 

Let’s look at examples of the income to EMI ratio:
 

2. Manage a Strong Credit Score

Your loan approval chances will be higher if your credit score is good (above 750). Your low score can be due to late payments or bounced EMIs. It can negatively impact your chances of approval. 

3. Remaining Loan Tenure

Your lender may be more willing to approve your loan if your existing loan is nearly repaid. Below-mentioned is the situation of Manisha, and the impact of her loan tenure on her eligibility for her second loan:
 

4. Avoid Applying to Too Many Lenders at Once

If you apply to too many lenders at once then in a short time it can reduce your score. Each lender will check your credit profile. You can try checking your eligibility using calculators instead of applying to too many lenders.

Right Way To Get A Second Personal Loan

1. Check Your Total Monthly EMI

You must always calculate your combined EMIs for both your loans. You must make sure that the total doesn’t strain your monthly expenses.

2. Check if Your Bank Offers a Pre-Approved Loan

A lot of banks offer their existing customers pre-approved loans. They make such offers based on:

• Your salary
• Your past repayment
• Your account history

Such loans are easy and quick to process.

3. Choose a Longer Tenure to Lower EMI

If you want to reduce your EMI then choosing a longer tenure will be best for you. But it will increase your total interest payment.

The following is the EMI for Jaspreet based on tenure for his loan of ₹2 lakh at 13% interest:
 

4. Consider a Top-Up Loan from the Same Lender

If your current lender offers a top-up loan then it will be easier for you to apply for a new loan. Such loans are linked to your existing loan. And they often come with faster disbursal and lower interest.
 

5. Combine Existing Loans with a Consolidation Loan

If you are already repaying more than one loan then you can apply for a personal loan combining all your existing loans.

Jatin is paying EMIs of ₹15,000 and ₹13,000 on his ongoing two loans. He took a consolidation loan of ₹5 lakh at 12% for 3 years. Now his new EMI is ₹16,607.
 

Pros And Risks Of A Second Loan

Pros:

• It provides easy access to extra funds if needed.
• It helps in fulfilling your emergency requirements.
• You can take it without providing any collateral.

Risks:

• It can increase your EMI burden.
• If you will not be able to handle it well then it can influence your credit score.
• There are chances of rejection if over-leveraged.

Final Thoughts

If you think that you cannot take a new personal loan because of your existing personal loan then you are wrong. It is possible for you to easily take a new personal loan while repaying your earlier one. 

The main things you need to understand while taking a second personal loan are:

• Your repayment capacity.
• You must calculate your EMIs properly.
• You must make sure that your credit profile looks good.

You must never forget one thing, each loan taken by you is your responsibility. So you must take only according to your necessity.

FAQs

1. How many personal loans can I take at once?

There is no fixed limit, but your repayment ability decides that.

2. How much time gap is needed between two loans?

A 6 to 12-month gap is usually advisable.

3. Can you tell me if a top-up loan is better than a second loan?

Yes, if your lender offers it, a top-up loan is usually more convenient.

4. Can I apply for a second loan from a different bank?

Yes, subject to eligibility and credit profile.

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About the Author

LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?