Consider the following scenario.
You had taken a personal loan 2 years ago. At that time, you had a large, unexpected expense, and your salary was too low to cover it. You were just starting your career; the odds were not in your favour. Hence, you got shackled with a high interest
rate of 18%.
You’ve been paying off that loan ever since. Now, with 3 years left on your tenure, you get an offer for a personal loan at 12%! This is partly because your monthly salary has doubled, you’ve improved your CIBIL score, and you’ve
built up a healthy credit history.
You’ve been paying off that loan ever since. Now, with 3 years left on your tenure, you get an offer for a personal loan at 12%! This is partly because your monthly salary has doubled, you’ve improved your CIBIL score, and you’ve
built up a healthy credit history.
Should you get a second personal loan?
When you decide to take the first personal loan, you will have your choice of lenders. Everyone will be willing to offer you money, and you can take your pick based on the lowest interest rate.
When it comes to your second personal loan, however, the choices will be a lot more restricted. This is because of the following reasons -
1. It may raise a question
The lender would want to know why you need extra credit before repaying your existing debt burden. If you’re unable to pay off the first loan, then the second loan will add to your debt burden.
2. It might have an impact on your credit history
Your credit score might get lowered due to taking on a second personal loan before paying off the first one.
Your credit score might get lowered due to taking on a second personal loan before paying off the first one.
However, there is a way you can make it work in your favour. You can use the money from your second loan to pay off the first loan having a higher interest rate. Once settled, you can pay the lower EMIs for the second loan.
That wouldn't be reckless at all. In fact, this would be smart financial planning!
Things to know before taking a second personal loan
You should meet the eligibility criteria
Your application for the second personal loan will be reviewed in the same manner as your first personal loan. Lenders will consider a variety of factors to evaluate your application. Your credit history, your work history and your employment
record will be reviewed. An Axis Bank Personal Loan, for instance, require your proof of income, along with your KYC documents.
Still unsure about eligibility? Check the personal loan eligibility criteria at Axis Bank's intuitive website.
You should have a compelling reason to require a second personal loan
Think about it from the lender’s point of view. You’re asking for a huge sum of money when you already have an existing loan. To top it off, personal loans are unsecured,
which is a huge risk for the bank.
One convincing reason is to refinance your old loan — to pay off your old loan using the new one. Remember to check the details of the EMI payments to ensure you’ll be making a gain on the whole. Axis Bank’s Personal Loan EMI calculator can help with this process.
Also Read: [How to Choose a Personal Loan Interest Rate That Fits Your Pocket]]
It is easier to get a second loan from your existing bank
It may seem like a good idea to check if you can get lower interest rates. But there are advantages to sticking with your existing bank. You have a much higher chance of getting a lower rate of interest.
To know the range of Axis Bank Personal Loan interest rates click here. If you have a good relationship with the bank, you’ll be able to access rates towards the lower end of the range.
Pay your EMIs on time
Having a second loan can impact your CIBIL score. Make sure all your EMIs are cleared on time to improve your credit history.
Check out Axis Bank's interactive interest rates on personal loan.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
