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Have you ever consider taking out two personal loans at the same time to spread the cost and ease the financial burden? The great news is that you can, but you need to be careful in terms of how you go about this. Taking out too many loans can reflect badly on your credit report and raise red flags for lenders. Here are four things you need to know about when taking out more than one personal loan.
Know how to strike a balance
It is possible to have more than one personal loan. Australians are known for using personal loans which account for 3.1% of Australia household debt.
This will be determined by the lender as to whether they want to issue you with another loan on top of your existing one. You can have several loans rotating at the same time, but you should be careful of doing this as it will affect your credit report.
Having too many loans out at the same time can be red flag for lenders, resulting in your future applications being denied. It could also prevent you from taking out a debt consolidation loan when you need it the most.
Will you be able to meet payments on both?
Two can be better than one, but you will have to consider whether you will be able to pay off both without it crippling you financially. Personal loans are there for convenience and to make your financial burden easier, but if taken out without giving proper thought it could add additional stress to you financially.
Failing to meet payments on your loans can make your credit score take a hit, leaving you with a bad mark. This means that you will struggle to get a loan in future. However, if you budget and manage your loans properly by paying them off on time then having two at once won’t be an issue.
Applying for more than what you need
You might consider applying for more than what you need on both loans, but you will have to be think about this move carefully. Try not to let your ‘what if’s’ through you in a financial hell.
If you only need $10,000 but apply for $12,000 you will have to think about what you are going to use the extra $2,000 for. You will also have to consider how taking out this additional $2,000 will affect your repayment plans.
Even if you are considering using the additional money to make early repayments, you will have to consider whether this will lower your repayments over time or will it just cost you the same amount despite it.
See if it has suitable features
Choose a personal loan that has features that match what you need. Look for features such as flexible repayments that offer you the option of an extra repayment facility. Redraw facility features can also come in handy. This is a feature that allows you to redraw a portion of what you paid off to your lender if an emergency pops up.
The most important thing is to make sure that you compare loans and their interest rates before settling. If you are a bit unsure you can speak to your lender to help clarify what the loan entails.
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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.
The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.
Approval for personal loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.
The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.
