New Delhi. Suppose you had taken a two-year personal loan a few months ago to buy a laptop for work. Now there is a medical emergency in the family and money is needed immediately. In such a situation, the biggest question that arises is whether a second personal loan can be taken at the same time? The good thing is that in most of the cases the answer is ‘yes’, but with some necessary conditions and testing procedures.
What does RBI rule say?
The Reserve Bank of India (RBI) has not made any rule that prevents a person from taking more than one personal loan. That means there is no limit set by RBI on the number of personal loans. This means that banks and NBFCs decide at their own level how much and what amount of personal loan they will give to a person. Most banks pay more attention to the total repayment capacity of the borrower than the number of loans.
The amount matters, not the number of loans
For banks, it is more important that how much total loan a person is taking and not how many different loans it is divided into. For example, if a customer’s total loan eligibility is Rs 5 lakh, whether he takes this amount in one personal loan or in two-three smaller personal loans – the total amount remains the same for the bank. However, generally the condition is that additional personal loan should not be taken from any other bank or NBFC at the same time.
Most attention is paid to debt-to-income ratio
Secondly, while giving a personal loan, the first thing banks look at is the debt-to-income (DTI) ratio. This ratio tells what part of your monthly income is going towards paying EMI. Suppose your salary is Rs 50,000 and you pay EMI of Rs 10,000 every month, then your DTI will be 20%. Most banks consider DTI up to 35% safe. In some cases DTI of 35% to 50% is also accepted, but then the bank may ask for a co-applicant or guarantor or may change the loan amount and tenure.
New calculation is done by adding existing EMI
If you already have a loan, then while giving a new personal loan, the bank calculates a new DTI by adding all the existing EMIs. This also includes the proposed EMI of the new loan. If even after this addition and subtraction the DTI remains within the bank’s prescribed limit and other conditions are met, then a second personal loan can be sanctioned. This is the reason why many people are successful in taking more than one personal loan simultaneously.
Important role of credit score and report
Personal loans are given without any guarantee, so banks look at your credit score and credit report very seriously. Generally a credit score of 750 or more is considered good. It is clearly visible in the credit report whether you have repaid the loans taken earlier on time or not, whether the EMI has been delayed, or whether any loan has been settled or written-off. If your credit history is clean, banks show confidence even if you have more than one loan.
If you have multiple loans at once, how to manage them properly?
If you have more than one personal loan or other loans, then their proper management is very important. Missing EMI not only results in penalty but also spoils the credit score. It would be better if you choose auto-debit facility for all loans, so that there is no risk of forgetting any EMI date. Apart from this, review your expenses and budget from time to time and try to reduce the burden by making loan prepayment when you get additional income.
A wise decision is the only safe path.
It is legally possible and sometimes necessary to take more than one personal loan. But this is beneficial only when your income is stable, DTI is under control and credit record is strong. Taking multiple loans without planning can increase financial pressure in future. Therefore, before taking another personal loan, honestly assess your repayment capacity and only then proceed.
