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Can I Avail Loans from Two Different Banks at the Same Time?

Personal Loan
Personal Loan
Sometimes, a financial emergency requires individuals to look for all the funding options that are available. One of the best options to avail quick funding is a Personal Loan. Now, with each bank, the types of Personal Loans vary and the deals offered may also be quite unique.

In case the loan amount provided by one bank is not enough, it is possible to apply for a second loan with another bank at the same time. However, there are some important 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, for instance, a SBI Personal Loan, you have the option of applying for a top-up from your bank or choose a second banking institution. However, there are some important 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, the 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 also affect any other credit option that 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 a great 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 important factor to consider is the debt to income ratio. If you already have an existing loan, it means that 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 in order to get a personal loan. With this amount blocked, getting a second loan may be harder. It is a good idea to check the eligibility criteria before applying so that your loan does not get 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 important to notice that using Check Personal Loan Eligibility Online or other tools too many times can actually 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 certain that you will qualify for the loan, apply for one. Only after this application has been approved should you look for a second loan. Even in case of the second loan, make sure that you check with the bank directly. With most loan options, you can avail the services of the loan officer who will be able to provide you with all the details that you need.

#4. The Second Loan Amount Is Usually Lower

Usually, a second loan amount may not be as much as you expect. This is because you already have a credit score that is lower and also because a portion of your net income is blocked already. It is also much harder to get a second loan unless you have the necessary income and the documents that you need in order for it to be processed.

Try Other Options

If you are in need of money for any immediate financial obligation such as education, medical emergencies, wedding expenses and more, you have the option of getting multiple personal loans. 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. There are some secured personal loan options that will help you get a higher loan amount and a lower rate of interest as well. This is the best option available as you will have to apply just once and only repay a single EMI each month.
  • Look for Top-up Loans: With both personal loans and home loans, you have the option of an applying for a top-up loan. This allows you to get an additional loan over the existing loan. The interest rates and the conditions of the loan 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 of the free personal loan eligibility calculators online to check how much top up loan you can avail.

Maintaining A Good Credit Score

To make sure that you are prepared for any financial emergency in the future, maintaining a good credit score is a must. This will help you get multiple loans as well, 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.
  • Have a credit utilization ratio of 30-35%. The credit utilization ratio is the ratio of the credit limit sanctioned to you and the credit amount used. 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 is your CIBIL Score. So, it is a good idea to repay your loans as fast as you can. It is also advisable to choose shorter loan tenures whenever possible

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