Is It Possible to Take out Two Personal Loans at Once?
Financial needs have never been met in full. Once you fulfill one, another comes up. Sometimes you’re even urged to take a loan to cover the gap. It may get worse to a point one loan may not be enough. At which point you may wonder, is it possible to take out two personal loans at once? Well, the answer to this question may be yes or no. It depends on a lot of things. Among them are the lender, your credit score and the amount you need. Let’s discuss more on how possible taking out two loans at once is.
Factors determining whether you will get two loans at once or not
- Credit score
This is the first consideration lenders look up to. What is your credit rating? A higher credit score will surely but not certainly allow you to take out two personal loans at once.
A high credit score simply means you can be trusted with any amount of money. It implies you pay your debts no matter how big or small the amount is. It is a clear indication of discipline and respect for other individuals’ money.
If you have a low credit score, getting two personal loans at once is almost impossible. It stops the lender from trusting you. Remember your credit score is the only way your lender can predict the risk you pose as a borrower. No lender wants to risk his/her money with a high-risk borrower. If they do, you are a fortunate lot.
On the other hand, a high credit score increases your chances of securing multiple loans. Lenders find it easier to trust highly rated borrowers. That is why they even go ahead and give them a low-interest payday loan.
At the end of the day, it is not about how much you borrow but how much you can pay. The higher you make in terms of income the more likely you will get multiple loans at a go.
A lender is able to establish your repayment ability by simply looking at your income. Although considering the gross income sometimes may be misleading. That is why it is important to consider other factors.
On the same note, lenders look at your debt-income ratio. This is the ratio of your debt to your income. Therefore, a lender is able to establish the disposable income you will be left with and compare to the amount you are trying to borrow.
At this point, it is clear whether the lender will choose to loan you more than once, at a go or not. If your disposable income can cater for the loan beyond a reasonable doubt, then you will get the loan. If the amount cannot, then be sure to receive a decline note. It is as simple as that.
You need to be able to comfortably repay your loan for a lender to risk with you. Your monthly income is the main determinant of your ability. Not gross but disposable income.
Banks become more lenient with loans when you have collateral they can hold on to. A car logbook or a title deed will work for you.
With the availability of loan security, you will get as many loans as your assets can guarantee you. This is a powerful determinant as it may overwrite the other factors.
For unsecured loans, you must have a high credit score and low debt-income ratio to secure a low-interest payday loan. There is no argument about that.
Once the loan becomes secure, it is for you to lose. You will get the multiple loans you want but dare to default and you’ll see the full force of auctioneers and the lender’s debt collection.
Providing security will not only help you acquire multiple loans at once but also assist you to get a low-interest payday loan. Therefore, you will end up paying less in the form of interest.
Lenders are only concerned about their money. None cares about where that money goes as long as it is paid back as agreed in the contract.
A guarantor is a risk mitigation strategy lender use. With two or three guarantors, a bank is sure their money will be repaid. That is why they will allow you to take more than two personal loans at once.
Without a guarantor then the lender will be less lenient with you. You will have to prove your repayment ability by yourself.
There is a thin line between a guarantor and a cosigner. Both serve the same purpose of acting as security especially in situations where the bank would wish to lend you but can’t trust you fully with the money.
Perhaps your income is high enough to repay the loan but your history betrays you. With a cosigner, the lender has someone to push to get the money repaid just in case you decide otherwise.
With a cosigner, it is possible to get multiple loans at once get approved.
Getting a second loan approved is easier if it is from the same lender. If you choose to go to a different lender, it becomes harder. Your debt-income ratio will be most affected since you are already servicing a loan from this other lender.
The debt-income ratio should be below 40% for easy approval. Going for a second loan from a different lender will mean a lower ratio which may be below the 40% mark, therefore, reducing the chances of getting your loan approved.
The Bottom Line
Is it possible to take out two personal loans at once? Yes, and no! If you have a low debt-income ratio, security, and a cosigner, you will get the loan. The reverse is true. Besides, taking a second loan from a different lender reduces your chances of getting the loan approved. You also need to check your credit score. A high credit score will increase your chances of getting your second loan’s approval.