- July 11, 2020
- Posted by: Ganeshcbani
- Category: Blog
Life is volatile and unpredictable. Unforeseen events beyond your control can raise the need for financing. Sometimes, chances shout for your attention and have to be seized and taken advantage of before someone takes you away. Therefore, even though you have taken a personal loan before, you will need another loan of this kind. However, before opting for multiple personal loans, certain things should be remembered.
Please use the Personal Loan Eligibility Calculator to calculate the maximum loan amount you qualify for based solely on your age, venue, income and current obligations.
Before you apply for another personal loan, here are a few things you should consider
Effect on human capital
Loans and the accrued interest must be repaid sooner or later. An extra loan will increase your monthly EMI bond and reduce your savings.
Higher rate of interest
In addition , taking multiple loans increases the likelihood of a loan default. The subsequent loan will therefore be offered as an additional compensation or premium at a higher interest rate for the greater risk of deficiency.
Keep in mind that when you opt for a second credit, you take an additional risk and the lender is aware of it. Therefore, until the lender has confidence that you have the financial resources to repay the loan , the lender can seek additional documents.
Cycle of debt
You can be caught in a loop of eternal debt. While it might initially seem like a good solution to take a second personal loan to meet your financial needs, you will always find yourself in a state of debt that seems to have no end. Therefore, if you really need the money at an inevitable expense it can be wiser to evaluate alternative options.
Currently, financial institutions require a minimum credit score to entitle the applicant to a personal loan. So, if you have previously defaulted on repayments or delayed EMI payment, taking a loan may not be a viable option, because your credit score would have been significantly hit. Another downside to selecting multiple loans is the diminishing effect on the loan value. In case you want a 2nd personal loan, your credit score will certainly be shaved. This will certainly challenge the next time a loan is applied for, or the bank will offer any further loan at a rate higher than usual.
Assets and duties
See your assets and liabilities, lastly. As obvious as it may sound, your assets must not be far from exceeding your liabilities. Assets will send you this additional coil if you can not pay the EMI out of your monthly net profit. Financial liabilities also determine and reimburse your ability to take loans.
Debt / Fairness
The debt-to – income ratio plays an important role. Usually if your loan is serviced by more than 40% of your disposable income, you will be considered unskilled.
Many Loans Alternatives
Rather than paying for many loans at once, there are several alternatives:
This is the archaic rule, but the most effective: reduce frivolous costs, re-examine your life costs and reduce savings wherever possible. Without a clear idea how you can manage your usual expenses in addition to the increased EMIs, it is not really advisable to take on unnecessary debt
Transfer of Personal Loan Balance
The borrower is entitled to a personal loan balance transfer to transfer the remaining loan from one bank to another. This can be a better choice if you need an extra fee and you are not happy with the options provided by your current lender. You may opt to pass your personal loan balance to another lender and negotiate additional personal loans. This gives you extra credit at reasonable rates and eliminates the hassle of managing two loans from separate lenders.
Consolidation of Debt Lending
Personal debt consolidation loan is a loan that assimilates all of the pre-existing balance / debts into one single loan, which contributes to the monthly payment of a single sum. Multiple debts are merged and integrated with new and advantageous terms of payment into one larger debt. Instead of taking a loan for a car, a wedding loan, and a loan for miscellaneous expenses, you can repay all the loans by getting a personal loan and you can pay your personal loan on a single EMI payment every month.
The main advantage of a debt consolidation loan is that you don’t need to keep track of various EMIs with different interest rates, different repayment tenures and different features. In the chaos of many EMIs, your loan score is a massive hit, your credibility is diminishing, and it becomes very difficult for you to take a loan at an affordable rate in the future. In addition, several EMIs include luggage of tedious paperwork and the difficulty of holding different documents with heaps of paper.
Like other lending choices, to make use of personal loans, you do not have to have any collateral as insurance. You can opt for an immediate personal loan at your mobile or computer ‘s convenience, anytime and anywhere.
Personal Flexi Loan
Instead of choosing two personal loans, you can select a Flexi personal loan that will allow you to withdraw the amount of the approved loan anytime you need it and to prepay the amount at your convenience. For the personal Flexi loan, you can borrow money up to and including the approved limit and only pay interest on the amount you use. The loan amount is not limited to a particular use. You can only withdraw the loan amount sanctioned for home improvement and pay interest on that amount, you pay the advance whatever you can, and then withdraw any amount for wedding as and when you consider it possible. The loan amount is not limited to a particular purpose.
It is therefore prudent to explore the alternatives before opting for a second loan. A second loan comes at a higher price, leaves a gaping hole in your savings and has a negative effect on your income. It is appropriate if the second loan is used for an attractive investment opportunity or for an amazing idea of business instead of the unnecessary luxury and opulence.