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Should You Opt For a Second Personal Loan While Having an Existing One?

A financial emergency can knock on your door at anytime. Moreover one might require financial help to buy a house, car or for the purpose of studying abroad. You might also need financial help in case of a medical emergency. Now if you don’t have enough saving you can’t arrange the cash overnight and you will need some financial help.

You can either seek some financial help from your friends and relatives or banks. Now if you are planning to use your saving in such a case then this is definitely not a good option to go for. Opting for this option can lead you to a huge debt as you might end up borrowing funds from many in case you fall short on your savings.

In such a case banks can help you with the finance. You can look upon banks for any financial help. Banks provide applicants with a personal loan even for those who are facing a financial emergency. And after the demonetization, it has become less difficult to borrow a loan as the interest rates on all loans have been discounted by the government. Which can be a great opportunity to for the ones who wish to borrow a loan as personal loan interest rates are usually high.

But if you already own a personal loan then taking another one can drown you in more debt. Because interest rates on personal loan are usually high and it might get difficult for you to repay both the loans.

Also, the lenders won’t approve your loan application if you already have a personal loan to repay. Your personal loan application can be only approved when you repay the first one. If you already have a personal loan you may know that lenders check your annual income and then approve the loan. Though the application process is easy, you might face a loan rejection if you are falling short on some documentation or have a low income.

Now suppose you are at the end of your personal loan tenure and want to opt for another one in the case of a financial emergency and have a bad credit history. Then this might also create a trouble during your second personal loan. It is very important that you have a good track record of loan repayment as to be eligible for a second loan. There is a very rare chance that the lender, then may it be banks or non-banking financial company (NBFC) may approve your second loan application with a bad credit history.

If you are planning to get your second loan from the same bank then you have a very rare chance of securing it. The previous lender that you have taken the loan from may not approve your second personal loan application. So in such a case instead of opting for the same lender you can take a personal loan from another lender. But it’s very important that you study the consequences before applying for a personal loan.

Moreover as the interest rate on personal loans is high it might get very difficult for you to pay EMIs of both the loans. Also, this might affect your credit score history which won’t be a good sign. It’s therefore recommended that you complete the repayment of the first personal loan and then opt for another. This will be more convenient for you as you can handle the Personal Loan EMI easily. Also, you might have to pay a low-interest rate if your credit scores from the first personal loan are high.

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