Apply for Two Personal Loans – Rules, Eligibility & Tips

The problem with financial emergencies is that sometimes, you can not assess how much money is required. What happens generally is: you apply for a Personal Loan, thinking that it would take care of all your imminent liabilities. But soon you realise that the amount is not sufficient, and you need some more money to manage the situation. Now, the question that will come to your mind is, “If you are eligible for second Personal Loan?”

After all, you have just availed a Personal Loan, so would your application be approved for another loan as well?

Can I Apply for Another Personal Loan?

Yes, you can apply for two or more Personal Loans at a given point in time. Subject to your requirement and credit profile, you can apply for as many loans or credit facilities as you want. Many financial institutions readily offer a second Personal Loan to borrowers if they meet the eligibility criteria.

For instance, if you have availed an SBI Personal Loan, you can apply for a Bajaj Finserv Personal Loan, if you meet the criteria specified by the NBFC. You can apply with your existing lender or a new lender, depending on your preferences. The application process is the same as applying for the first loan.

Following are the major factors that will impact your eligibility for a second Personal Loan:

• Credit score and repayment history: If you have a 750+ credit score (even after taking the first Personal Loan) and have been repaying your EMIs regularly, then the chances of receiving approval for the second Personal Loan are high. All lenders want is to ensure the safety of their money by lending to a responsible borrower. Your credit score and repayment history help them in establishing your creditworthiness for a second Personal Loan.
• Debt to income ratio: Generally, financial institutions require that the overall debt-to-income ratio does not cross 60% after sanctioning a loan. This benchmark is followed, considering that you can use only a certain percentage of your monthly income towards EMI payment. If your debt-to-income ratio will stay below the desired threshold after availing the second Personal Loan, your application has better chances of being approved.
• Fulfilling the eligibility criteria: This goes without saying that to be approved for a second loan, you must satisfy the eligibility criteria specified by the lender. If your profile satisfies the requirements and guidelines of the lenders, you can receive the second Personal Loan for your requirements. Moreover, you must have a valid explanation regarding the requirement of the second loan within a short while of receiving the first loan.

Things to consider while applying for the Second Personal Loan

While your credit profile might make you eligible to apply and be approved for a second loan, but should you go for it. You need to understand what will be the future implications of this decision on your financial future. Below mentioned are some of the major things you must consider while applying for another consecutive Personal Loan:

• Interest cost would increase: The rate of interest for Personal Loans is higher as compared to secured loans. By availing a second Personal Loan, you will have to serve a higher interest cost that might create more problems than solving the actual one. For instance, Bajaj Finserv Personal Loan Interest Rates start from 12.99% per annum and can go up to 19% per annum, which can result in additional interest burden for you.
• Monthly EMI payments will increase: You will have to cater to two or more EMIs every month if you avail more Personal Loans. Managing a higher number of EMIs is anyways cumbersome, and it becomes more complicated during times of financial crisis.
• Push you toward a debt trap: If you are applying for a second unsecured loan for some leisurely expenses or day-to-day overheads, then it is not a wise move. Before you realise, you might end in a debt trap.
• Will not get the best offer: When you apply for a new loan, soon after you have taken the first loan, you will not get the best offer from the lender. For, this shows your desperation for credit. Lenders will charge a higher interest rate to cover their risk.
• Impact on your credit score: Multiple loan applications register in your credit report as hard queries and availing multiple loans result in a higher debt-to-income ratio, both of which will impact your credit score adversely.

What are the alternatives to another Personal Loan?

Applying for a second Personal Loan is not the only solution to handle the financial problems you are facing. Following are the various alternatives that you can explore to fund your needs:

• Take a Top-Up Loan: If you have a good credit profile and are repaying the EMIs on time, you can avail of a Personal Loan top-up from your existing lender. This process is quicker and more efficient in helping you fight a financial crisis effectively.
• Balance transfer: Instead of applying for a personal loan, you can instead opt for a Personal Loan Balance Transfer to a new lender. Many lenders offer lower interest rates and higher loan amounts for balance transfer customers.
• Second loan: You can apply for a second loan, which will be offered in combination with the first loan. This facility is offered by a few lenders like State Bank of India, wherein you can apply for as many Personal Loans up to a certain limit if your debt-to-income ratio is satisfactory.
• Pre-approved offers: Many Credit Card companies offer pre-approved Personal Loan offers to their select customers. You can check with your existing Credit Card company if such a facility is available against your Credit Card. As this facility is pre-approved, there is no need to apply separately.

All in all, you can certainly apply for a second Personal Loan if the need arises but should avoid doing so unless it is necessary. Instead, explore the other alternatives available to you for an effective solution to your problems.