In life, needs and opportunities often emerge simultaneously. For example, let’s say you suddenly need to do an urgent house repair even though you’re already struggling to pay rent and tuition. An incident like this is like a nightmare, and taking more than one loan from an SG money lender could be a way out.
At the same time, doing so could end up confusing, and you might end up paying more, especially since interest rates might soar. So, is it possible to manage multiple loans while being stress-free? This is a tricky act, so we’re going to give you ways to do it.
Is it possible to have multiple loans?
People can borrow multiple loans since installment loans are fundamentally closed debt products that can be used to buy and cover anything, such as mortgages, car loans, and personal loans, and there are no regulations that ban someone from having many loans at the same time. As a result, you can have many loans with various lenders.
However, it is important to note that whether a second or third loan is approved depends on the lender’s requirements. Some lenders limit the number of loans you can settle with them, the amount you can borrow, or both. If you have too much current debt, they might reject your application.
Ultimately, as long as you have consistent income, solid credit, and fulfil the debt-to-income (DTI) ratio that lenders require, multiple loans from different lenders will not be denied. As a result, you should think carefully before taking out many loans, as this can put pressure on your budget.
The burden and advantage of taking multiple loans
The Burden
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Must have a steady income to commit to your EMI
Let’s consider when you have already taken out education loans, credit card balances, and home loan EMIs (equated monthly instalments). In such a predicament, you must devote a significant percentage of your income to the monthly repayment of all EMIs until the loan is entirely repaid. It also goes without saying that you must also have a steady income that can cover all of your responsibilities.
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Have to diligently keep on track
It’s important to keep track of the billing cycles for your many loans. Your credit score is going to drop if you miss even one payment. If you have to, you must commit to reducing your standard of living to pay them on time. It’s also important to schedule your repayment based on the precise terms of each loan, aligning with your financial capabilities.
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Ready to spend your time calculating and utilising many tools
If you are confident that you are ready to commit to multiple loans, you can begin by calculating your DTI and CIBIL scores, which determine your capacity to obtain loans. Make sure you have a low DTI ratio but a high CIBIL score. To estimate your overall liabilities, use the personal loan EMI calculator.
The advantages
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Building a positive credit history
Having different types of loans and being effective in managing and paying them regularly implies that you are trustworthy. It is not that easy to be a responsible borrower while handling several different loans, but if you are one, your credit history will improve and grant you better loan conditions, lower interest rates, and increased financial flexibility in the future.
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Utilising low-interest debt by capitalising it
Furthermore, obtaining loans during periods of low interest rates allows you to capitalise on them as an investment with the potential to boost overall profits.
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Access to cover emergency funds
Personal lines of credit, for example, might serve as a financial safety net by providing quick access to funds in times of need.
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Organised source of funding for every financial goal
Finally, taking out multiple loans allows you to achieve diverse financial goals without putting unnecessary strain on your income. You can use multiple loans to buy a house, start a business, or further your education.
Conclusion
Managing several loans while being stress-free is truly feasible if you are willing to commit, have a full and careful plan, and make the right decisions. We hope that this article has been a good place to start for the advantages and disadvantages of taking out multiple loans.
