Some financial institutions, banks or other types of loan providers will allow you to take out more than one personal loan at a time, provided that you can afford it. The loan provider will normally check your income and may also require some information regarding your current debt and expenses in order to determine if you can afford a second loan.
Multiple Loans Are Possible
There is nothing stopping you from having another personal loan through a second or third provider. Once again, the loan provider will probably check whether you will be able to afford the monthly repayments before approving the loan. A personal loan is probably one of the most flexible finance options available and you will also not be required to offer a reason for the loan or need to provide any type of security or collateral in order for the loan amount to be awarded.
However, other factors will play a role in determining whether a second or multiple loans will be awarded, whether through the same financial institution or another credit or loan provider. A credit check is the most common evaluation that will determine approval. A bad credit record will probably mean that you won’t get a second or third loan whereas you will have a better chance of an additional loan being approved if you have an ideal credit rating.
Check Your Affordability
Before applying for a personal loan, it is important to make your own affordability assessment. List your current expenses and deduct these from your monthly income to arrive at the amount that you will have available to repay an additional loan. If you cannot afford the monthly repayment, it is best not to take out another loan.
In general, it is not advisable to take out another loan until you have settled your current loan or other debt. Multiple loans can result in falling into a debt trap where you constantly need to apply for more credit and loans in order to repay what you owe. The more debt you have, the more likely it is that you will not be able to afford to keep repaying your loans and other credit arrangements.
Fees And Charges
Keep in mind that each loan charges interest and other fees. This means that a loan is costing you money at the end of the day. If you have multiple loans, your available income is going towards paying the interest and additional charges as it is, therefore, its best to pay cash where you can and save money on interest.
There is one very good reason where a second or even third personal loan can be of great benefit and this is to consolidate your existing debt. If you have multiple credit cards, store credit or other debts, you can repay these from the amount you receive from a personal loan.
If you are using a second personal loan to consolidate your debt, you should, however, check whether you will be paying less in interest. It is also advisable to check with your creditors if they offer a discount for settling your debt.
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