An individual can apply for a loan if he/she is eligible as per the lender. First, the applicant will have to fill an application form. Then, the lender checks the individual’s income level and credit history. There is more eligibility criteria set by them which the applicant must fulfill. Only after the lender approves the application, an individual can avail any loan from the lender. This is the standard process for availing a personal loan and other types of loans.
But when you have an existing loan and want to apply for a new type of a loan, the criteria changes and there are few things you must be aware prior to applying for multiple loans;
The ratio between your debt and income is very important. The lender will usually not grant the applicant a loan when their debt crosses over 40%* of the income.
The lender will also check how you have dealt with the previous loans. Your loan repayment history will give them a clear idea about your profile.
You need to understand that since you are taking a new loan, you might not have the bargaining power with the bank to reduce the interest rates and waive off certain fees.
You need to maintain a good credit score. If you can manage to keep a good credit score, the lender understands that you are a disciplined borrower and might give you a better interest rate on the new loan.
You also need to check how your income and expenses stand as of today. You need to check your daily expenses and analyze if you can make the loan repayments without defaulting. This is to make sure your credit score doesn’t get affected.
To be on the safer side, always weigh your assets and liabilities. Yes, having sufficient assets will help you with a cushion in the unfortunate event of you not being able to repay the loan.
It is very important to understand your expenses and income before you opt for taking multiple loans. This is to understand the risk of defaulting on any loans.