Personal loans have become a popular lifeline for India’s middle-class – helping with everything from medical emergencies and education fees to weddings and home renovations.
But what if one loan isn’t enough to cover all your needs?
Many salaried and self-employed Indians aged 25-50 find themselves asking: Can I take multiple personal loans at the same time?
The short answer is yes – having more than one personal loan is possible.
However, juggling multiple loans can be a double-edged sword. In this blog, we’ll explain whether it’s legal and feasible to have multiple personal loans in India, explore the pros and cons of taking more than one loan, outline the key factors lenders consider for a second personal loan, share smart tips to manage multiple debts, and highlight mistakes to avoid.
Read on to learn what you need to know – and by the end, you’ll also discover a smart way to compare and apply for personal loans, to simplify your loan journey.
Is It Legal and Possible to Have Multiple Personal Loans in India?
Legality
Good news—India has no laws prohibiting you from having multiple personal loans simultaneously. The Reserve Bank of India (RBI) doesn’t impose any fixed limit on the number of personal loans one can avail. This means you can legally take a second personal loan (or even a third) while still repaying the first.
Lender Policies
While the law doesn’t set a limit, banks and NBFCs have their own policies. Most lenders allow customers to hold two or even three personal loans at a time, provided you have the income and repayment capacity to support them. Each lender will assess your financial situation and repayment history before approving an additional loan.
They want to ensure you’re not over-leveraged. If you’re seeking a second loan from a different bank, remember that all loans are recorded with credit bureaus – so the new lender will see your existing loan obligations.
You can’t “hide” a current loan; thanks to recent RBI norms, lenders now update credit records every 15 days (instead of monthly). This faster reporting means any new loan will show up on your credit report almost in real-time, making it harder to take multiple loans in quick succession. The intent is to improve risk assessment and prevent borrowers from over-borrowing or evergreening (i.e. taking new loans to pay off old loans).
Feasibility
So yes, it’s possible to have multiple personal loans in India, but whether you will get approved for another loan depends on your financial profile. If your first loan is nearly paid off or your income has increased, you stand a better chance of getting a new loan. Some individuals opt for a top-up loan with their existing lender (essentially increasing the amount of the current loan) instead of opening a completely separate loan account. Others apply for a fresh personal loan with a different lender to take advantage of better interest rates or a higher loan amount. Either way, lenders will closely evaluate your profile before extending more credit. We’ll discuss those eligibility factors next.
Pros and Cons of Taking Multiple Personal Loans
Like any financial decision, taking on multiple loans has its advantages and disadvantages. Here’s a quick look at the pros and cons:
Pros of Multiple Personal Loans
Access to More Funds
The primary benefit is obvious—you can meet multiple financial needs simultaneously. For example, you might use one personal loan to renovate your home and another to cover a medical emergency or business investment. Having two loans can be a way to address two important goals at once without waiting.
Flexibility and Choice
With more than one loan, you have the flexibility to choose the best loan offer for each need. You could take a second personal loan from a different lender offering a lower interest rate or better terms for that particular amount. This means you’re not reliant on a single source – you can mix and match loans to optimize cost.
Builds Credit (if managed well)
Handling multiple loans responsibly can boost your credit score over time. Successfully paying EMIs on two loans demonstrates strong repayment discipline. This diverse credit experience can enhance your credit profile, making you look financially responsible to future lenders. Some borrowers even find that having a mix of credit (multiple loans or credit cards) improves their creditworthiness, as long as they never miss payments.
Cons of Multiple Personal Loans
Higher Debt Burden
Taking multiple loans means you’re committing to multiple EMIs each month. This can put significant strain on your monthly budget. A big chunk of your income will go towards repayments, leaving you with less disposable income for other necessities. If 40-50% or more of your income is going to EMIs, you could struggle with day-to-day finances.
More Interest Cost
More loans = more interest to pay. Even if each loan is at a reasonable interest rate, you’ll be paying interest on two (or more) principal amounts. Over time, the total interest outgo will be higher than if you had one consolidated loan. Multiple loans also mean paying processing fees and possible charges (like loan processing fees, annual charges, etc.) on each loan, which can add up.
Credit Score Risks
While timely payments on multiple loans can build credit, the opposite is also true. Missing even one payment can hurt your credit score badly, and with multiple loans, the chances of slip-ups are higher. Additionally, each new loan application causes a hard inquiry on your credit report and increases your overall debt, which can temporarily reduce your credit score. If your debt grows faster than your income, you risk defaults that will substantially damage your creditworthiness.
Tougher Future Loans
When you already have several loans, lenders may be hesitant to lend you more. You might find it difficult to get another loan (say, a home loan or car loan) or a credit card until you clear some of your existing debt. Too many open loans make you look high-risk. In fact, if your current personal loans already amount to the typical maximum that banks allow based on your income, any new loan application will likely be rejected.
Over-Leveraging & Debt Trap
Perhaps the biggest con is the risk of over-borrowing. It’s easy to fall into a debt trap by taking a new loan to pay off another, or borrowing more just because it’s available. This cycle of refinancing old debt with new debt (often called evergreening) can lead to a serious financial crisis. New RBI rules targeting evergreening highlight how dangerous this practice can be. Over-leveraging yourself with multiple personal loans can quickly snowball out of control if your income falters or expenses rise unexpectedly.
In short, think carefully before taking multiple personal loans. If the pros (meeting urgent needs, etc.) outweigh the cons in your situation, proceed with caution and a solid plan. Next, let’s look at how lenders decide whether to approve that second or third loan.
Main Factors Lenders Consider for a Second Personal Loan
When you apply for an additional personal loan, lenders will scrutinize your profile even more strictly. Here are the key factors that determine your eligibility for a second (or third) personal loan in India:
1. Credit Score
Your credit score (often your CIBIL score in India) is crucial. Lenders typically want to see an excellent credit score, generally 750 or above for multiple loans. A high score signals that you have a history of responsible credit behavior. Your score will reflect if you’ve been paying your existing loan EMIs on time. A lower score won’t necessarily legally stop you from getting another loan, but it will make approval difficult and could result in higher interest rates on the new loan (to compensate for risk). Essentially, a great credit score gives lenders confidence that you can handle more debt.
2. Income and Debt-to-Income Ratio (DTI)
Your income (salary or business earnings) and how much of it is already going toward debt will be closely evaluated. Lenders will calculate your Debt-to-Income ratio – the percentage of your monthly income used to pay existing EMIs. A DTI below ~40% is usually preferred by most lenders for approving another loan.
This means if you earn ₹50,000 per month, your total EMI payments for all loans should ideally be ₹20,000 or less. If your DTI is too high, banks fear you won’t be able to comfortably repay a new loan. In fact, many Indian banks cap the total loan amount you can borrow to around 6 to 8 times your monthly income.
So if you’re already at that threshold with existing loans, a second loan would push you over the limit and likely be denied. Bottom line: a steady, sufficient income with room to accommodate another EMI is essential.
3. Loan Obligations
Lenders will look at your current loans – how many and how much you owe. If you already have significant ongoing EMIs (personal loan, home loan, car loan, credit card debt, etc.), it raises a red flag. An applicant repaying multiple loans is automatically seen as higher risk. For instance, if you’re still repaying a large first personal loan or other debts, the bank may worry that adding another EMI could overstretch your finances. They’ll also check your repayment history on those existing obligations: have you been paying on time? Any defaults or settlements? A clean track record on current loans will work in your favor, while late payments or too much outstanding debt will hurt your chances of a new loan.
4. Job Stability and Profile
Your employment status matters. Salaried individuals should typically have stable jobs (lenders often like to see that you’ve been with your current employer for a certain minimum period, e.g. 6-12 months). A stable job with regular income gives confidence that you can service multiple EMIs.
For business owners or self-employed individuals, lenders will look at the consistency of your earnings, business stability, and past income tax returns. Your age can also be a factor (you should typically be in the eligible age range and not nearing retirement without a plan).
Essentially, the lender is judging if your financial profile is strong enough to take on extra debt. A promotion or salary hike since your first loan can improve your eligibility for a second one, whereas if your income has dropped or you switched to a lower-paying job, that could hinder approval.
5. Lender’s Internal Policies
Apart from your personal metrics, each bank or NBFC has internal rules about multiple loans. Some lenders might not give a second personal loan to a borrower who already has one ongoing with them, and instead they may offer a top-up loan on the existing loan. Other lenders might allow it, but possibly with conditions (for example, some banks may require that a certain portion of the first loan is paid off before sanctioning a new one). If you approach a new lender, they too will have thresholds for credit score, DTI, etc., that need to be met.
One point in your favor can be an existing relationship: if you apply for another loan with the same bank where you have an account or your first loan, they might be more flexible if you’ve been a good customer. Still, no lender will approve a second loan if they feel you can’t manage it. All lenders, old or new, will ultimately consider the same financial factors to decide on your loan’s fate.
6. Purpose of the Loan
This isn’t always asked for personal loans (since they’re unsecured and versatile), but it can indirectly affect your approval. If you can demonstrate that the second loan is for a sound purpose (say, home improvement or a medical emergency) and not frivolous spending, a lender may view it more favorably. Some lenders might even ask if you have the new loan earmarked for consolidating other debts – which could be a positive sign if it simplifies your finances. On the other hand, taking multiple loans for purely consumer spending without improving income could worry a lender. It’s always best to borrow only what you truly need. Avoid taking additional loans for non-essential expenses, as lenders (and your own budget) will question the wisdom of that.
To get a second personal loan approved, you need to show the bank that you have the capacity and reliability to repay it comfortably alongside your existing loan. A high credit score, low debt-to-income ratio, stable income, and good repayment track record are the winning combination. If you tick those boxes, most lenders will consider your application for another loan. Next, let’s talk about how to manage multiple loans wisely if you do get them.
Smart Tips for Managing Multiple Personal Loans Effectively
Taking on more than one loan is a serious commitment. To ensure you don’t falter, follow these smart tips for managing multiple personal loans like a pro:
1. Create a Budget and EMI Calendar
Planning is key when you have to pay two or three EMIs every month. Sit down with pen and paper (or a spreadsheet) and map out all your income sources and expenses. Make a detailed budget that includes each loan’s EMI due date and amount. Knowing exactly how much of your monthly income goes into loan repayments will help you adjust your spending. Mark your calendar for each EMI due date or set reminders – this way, you won’t accidentally miss a payment because you forgot a date.
2. Automate Your Payments
One effective way to handle multiple EMIs is to automate them. Set up standing instructions or auto-debit with your bank to deduct each loan’s EMI automatically from your account before the due date. Automation ensures you never miss a payment, thus avoiding late fees and protecting your credit score. Just be sure to maintain sufficient balance in your account before the EMI dates. Many people align their EMI dates right after their salary credit date, to ensure there’s money to cover the dues.
3. Prioritize High-Interest Loans
If you have more than one loan, one might carry a higher interest rate than the other. It’s wise to prioritize repaying the costliest debt first. Continue paying all required EMIs, but if you have any extra funds (a bonus, a salary hike, or savings), consider prepaying or making an additional payment towards the loan with the higher interest rate. By knocking down the expensive loan faster, you reduce your overall interest burden and free up cash flow sooner. This strategy is often called the “avalanche method” in debt management – it saves you money in interest over the long run.
4. Consider Debt Consolidation
Managing multiple loans separately can be cumbersome. If you’re finding it hard to keep track or the interest rates are high, explore whether you can consolidate your debts. This could mean taking a single larger personal loan to pay off two smaller loans (ideally the larger loan would have a lower interest rate).
Or you might check if your bank offers a balance transfer facility – where you transfer one loan to another lender offering a lower rate. Consolidation can simplify your life by turning multiple EMIs into one and potentially lowering your interest costs. However, do the math to ensure that any processing fees or foreclosure charges don’t negate the savings. Only consolidate if it genuinely makes repayment easier or cheaper.
5. Avoid Taking New Loans Unnecessarily
When you’re already handling multiple personal loans, discipline is crucial. Put a temporary freeze on taking any new loans or making big purchases on credit until you’ve significantly paid down your existing debts. It might be tempting to swipe a credit card or buy a gadget on EMI, but additional debt will only increase your burden. Focus on clearing what you owe first. The relief of becoming debt-free (or reducing your loan count) will be worth postponing non-essential loans. Remember, every new loan means one more EMI to juggle, so be very selective and sure that any new borrowing is truly essential.
6. Maintain an Emergency Fund
One of the dangers of having multiple EMIs is that an unexpected setback (like a job loss, illness, or any emergency) could derail your repayment plan. Protect yourself by maintaining an emergency fund – ideally, 3-6 months’ worth of expenses and EMIs set aside in a savings account.
This buffer will help you continue servicing your loans on time even if something goes wrong temporarily. Knowing you have a safety net will also give you peace of mind when managing debts. Without a backup fund, you might be forced to take another loan or miss payments if a crisis hits.
7. Monitor Your Loans Regularly
Keep an eye on all your loan statements and credit score. Monitoring helps ensure there are no unexpected charges or errors. It also lets you track your progress as balances come down. Celebrate small milestones (like finishing one loan!) – it will keep you motivated. If your financial situation improves (say your income rises), try to pay extra towards your loans to finish them sooner. Regular check-ins with your debt status can help you stay on top of the situation rather than feeling overwhelmed.
By following these tips, you can manage multiple personal loans responsibly and avoid the debt trap that many fall into. The key is organization, discipline, and a proactive approach to tackling debt.
Mistakes to Avoid When Juggling Multiple Loans
When dealing with more than one loan, there are some common pitfalls you should be careful to avoid:
1. Overestimating Your Capacity
Don’t make the mistake of taking on more loans than you can afford. It’s easy to be optimistic in the moment (“I can handle two EMIs!”), but be brutally honest with yourself about your repayment capacity. Use online EMI calculators to double-check that you can handle the combined EMI outflow comfortably.
A good rule of thumb is to keep total EMIs within 40-50% of your take-home pay – anything beyond that can put you in a precarious position. Avoid the trap of assuming you’ll somehow manage; plan conservatively.
2. Not Comparing Interest Rates and Terms
A major mistake is taking another loan without shopping around for the best deal. Interest rates, processing fees, and terms can vary widely between lenders. If you hastily take a second loan from the first provider who offers, you might end up with a much higher rate than you qualify for.
Always compare offers from multiple banks or financial institutions for that second personal loan. Even a 1-2% difference in interest rate can make a big impact on your monthly EMI and total interest paid. Similarly, watch out for processing fees or prepayment charges – a loan with zero prepayment penalty might be very useful if you plan to close it early. The bottom line: research and compare before you borrow (we’ll introduce a way to do this easily in the conclusion).
3. Applying to Many Lenders at Once
When looking for a second loan, you might think applying to several lenders increases your chances. But multiple loan applications in a short time frame can actually hurt your credit score. Each lender will pull your credit report, and numerous back-to-back inquiries signal that you’re “credit hungry.” This can make lenders nervous and lead to rejections or higher interest offers.
It’s better to do your homework, shortlist one or two lenders that fit your eligibility, and apply sequentially – or use an online comparison platform (like Match My Money) that helps you find suitable options without harming your credit. In short, don’t turn your loan search into a frantic fishing expedition; be targeted.
4. Borrowing to Repay Borrowing
Using one loan to pay off another (unless it’s a planned consolidation) is a red flag. If you find yourself taking a new personal loan just to meet the EMI of an existing loan, you’re likely in a debt spiral. This practice of endlessly rolling over debt is unsustainable and is exactly what recent RBI measures aim to stop.
Every time you take a new loan to pay an old one, you’re just kicking the can down the road – and increasing your total debt (due to interest and fees on the new loan). Avoid this evergreening of debt at all costs. If you’re struggling to pay your EMIs, it’s better to speak with your lender about restructuring or seek professional financial advice, rather than masking the problem with new loans.
5. Missing Payments or Paying Late
With multiple loans, keeping track of all payment dates can be challenging, but missing a payment is one of the worst mistakes you can make. A single missed EMI can incur hefty late fees and also dent your credit score for the long term. If you default on one loan, it could even affect your standing on your other loans – for instance, another lender might reduce your credit limit or be hesitant to extend further credit if they see a new default on your report. To avoid this, use the tips mentioned (automation, reminders) and if you ever think you might miss a payment, proactively reach out to the lender. Sometimes banks offer a grace period or can work out a solution if informed in advance. Never ignore a payment due date.
6. Not Having a Clear Repayment Plan
Taking multiple loans without a clear roadmap to repay them is a recipe for trouble. Don’t just focus on getting the loan; think about how you’ll close it. For each loan, have a timeline in mind for repayment (for example, perhaps you plan to finish a shorter-term loan in 2 years, and a longer one in 5 years). Plan for prepayments if possible. If you receive any windfalls (bonus, gifts, tax refunds), prioritize using them to reduce your debt. A common mistake is treating EMIs as a fact of life and only paying the minimum each month without thought of accelerating repayment. Instead, actively plan to become debt-free. This not only saves you money in interest but also ensures you don’t carry debt longer than necessary.
7. Neglecting to Seek Help or Advice
Lastly, don’t go it completely alone if you’re feeling overwhelmed. Many people hesitate to talk about debt problems due to pride or fear. But if you’re struggling with multiple loans, reach out for advice – perhaps from a financial planner or a trusted mentor. Even your bank’s loan advisor might offer some restructuring options if you explain your situation. The mistake is ignoring the problem until it snowballs. By being proactive and seeking guidance, you might find solutions (like refinancing, consolidating, or adjusting tenures) that make management easier. Remember, there’s no stigma in getting help to manage debt – it’s a smart move that many financially savvy individuals make.
Avoiding these mistakes will save you a lot of headaches and money. Managing multiple loans is certainly challenging, but with careful planning and prudent habits, you can navigate it successfully.
Now that we’ve covered all about handling multiple personal loans, here’s a bonus tip: use technology to your advantage. In today’s digital age, comparing loan offers and finding the best deal has become much simpler – you don’t have to visit multiple banks or make guesses. In fact, one such solution is right at your fingertips.
Simplify Your Loan Search with Match My Money
Taking on another personal loan? It’s important to compare your options and choose one that truly fits your financial situation. That’s where Match My Money can help.
Instead of applying blindly to multiple lenders, use Match My Money to see personalized loan offers from trusted banks and NBFCs – all in one place. You can easily compare interest rates, EMIs, and eligibility in just a few clicks.
Whether you’re salaried or self-employed, Match My Money helps you make smarter, faster borrowing decisions – without the guesswork.
