While a personal loan from a licensed moneylender is a powerful financial tool, what happens when one loan is just not enough?
Usually, when you’ve many needs, you mostly want to know, “Can I have more than one personal loan at a time?” And the obvious answer is yes. But there is a lot behind that yes-or-no story.
Technically, most lenders can offer multiple personal loans as long as their minimum requirements are satisfied. But just because you qualify for various loans does not mean you should take them.
Any credit application you make will entail a variety of examinations by the licensed moneylender regarding your capacity to repay them. They will examine your credit score, income debt-to-income ratio, and pay history to determine whether you qualify for another loan.
Notably, although you can qualify for multiple, several loans are a handful for you to tackle as a borrower. You’ll have different dates you’ll have to bother about, and any delayed payment may cut from your credit score. Extra debt further decreases the money you can use for your needs.
How Many Loans Can You Handle?
While most lenders do not have a common cap about the number of loans one can have, there is a limit depending on one’s borrowing capacity.
Your credit score is the primary determining factor in the number of loans you can get. If your credit score has improved due to the successful handling of past loans, you will provide easy access to more loans. But if you have a history related to troubled repaying or have used most of your borrowing capacity, then you may have to be considered a high-risk borrower.
Also, your debt-to-income ratio is crucial when determining how many loans you qualify for. For instance, most lenders want your debt-to-income ratio to remain at or below 35-40%. If an additional loan makes the debt go beyond this, it will most likely get denied.
Why Would You Want Multiple Loans from Licensed Moneylender
In life, there will be those situations when taking out more than one loan may make sense. Some of the instances that necessitate taking more loans include;
- Debt consolidation. In case of a need to consolidate high-interest debt where one has a loan with extremely high interest rates, one can take the second loan to consolidate the debts into one single and, hence, manageable payment.
- Cover New Expenses: Life does not always happen according to plan, and perhaps you have repaid a part of your original loan, but you need funds for new expenses such as a medical emergency, or repair of your vehicle.
- Building Credit History: Several loans that one has dealt with successfully establish that you handle debt and improve your credit score.
How to Manage Multiple Loans
If you have decided this is the right decision, here are a few tips:
- Tracking due dates. Keeping a calendar helps you not miss payment dates.
- Loan Consolidation. If the number is overwhelming, then refinance and consolidate and merge them into one on better terms
- Budget and Stick to it. Be sure to live within your means and concentrate on paying debt.
Bottom Line
You can have multiple personal loans at once as you have carefully planned and understand how much you can handle.
Therefore, consider the reason for needing more money, your ability to take responsibility for an added loan, and how this plays into your big picture of financial goals. If unsure, consult a licensed moneylender to help you weigh all options before adding more to your debt pile.
Significantly, your licensed lender can help with the information you need before you apply for that extra loan. Lastly, loans are tools, not solutions for long-term financial problems.