Unexpected financial needs can hit anyone. Even if you plan really well, you may be faced with a situation where you need financial help. For instance, you recently upgraded your home and funded it with a personal loan, and while you are still paying off the loan you are hit by an unplanned medical expense. Sometimes, we underestimate the need and apply for a loan and then with time more costs get unveiled. In such circumstances, you will have one question in mind, can you take two personal loans at the same time?
While the answer to this question is dependent on various factors like the lender, your individual financial situation, usually one is able to get two loans at the same time.
Key considerations to note before applying for a second fast cash loan
Before you take the leap and apply for another personal loan, you must understand the potential implications on your finances and then decide whether it is a wise decision or not.
- Are you options getting limited: When you opt for a second loan you will have a larger debt to pay off. This will increase your debt-to-income (DTI) ratio. Borrowers with lower DTI ratios are more likely to get loans at lower interest rates. So, you may not be able to get a great deal on your second loan. Not all lenders will be willing to give a second instant cash loan, so you will have to explore a few options before you find one.
- Impact on your credit score: Every loan application that you make impacts your credit score and this is visible to all banks and lenders. From a lender’s point of view, multiple and consecutive loan application on the credit score are not a conducive situation to lend money. If you have had a good credit score in the past, this will not be an obstacle for you. However, there can be some impact on your future potential to borrow money. If you intend to apply for a larger loan like a home loan in the near future, then you should be extra cautious.
- Your budget: When you take a second loan, you will have to make extra repayments every month. This will stretch your expenses every month and you must plan for this increase in your expenditure. Before you apply for a loan, calculate the repayment estimates so that you can plan better.
Some alternate options
Taking a second fast cash loan may not be the only option available for you, there are other potential alternatives that you can explore:
- Refinance to a bigger loan: Some banks and lenders allow refinancing, which allows you to have access to more money without taking a new loan.
- Overdraft: Once all available funds in the bank account are used, an overdraft can be accessed. Apart from the interest charges, you will also be charged a transaction fee for every transaction you make.
- Credit card: If you have the need for a smaller sum of money, a credit card can help you meet your needs. However, you must note that credit card has higher interest rates than instant cash loan, if you do not pay the bill in full on time.