Earlier days when taking a loan is considered to be a big thing, people used to take only when they think it is very important. But nowadays, getting a loan has become much easier than before and most of them are taking multiple loans also. We can avail loans for any purpose, be it for personal needs or for business purposes or for fulfilling our dream to buy a house, loans are always our saviors when we are in need of money. Taking multiple loans can be very beneficial as our financial needs are fulfilled immediately but you should also be able to repay back the taken amount. If you already have a loan and a need arises to opt for another loan, then it depends totally upon your current income and your repaying capacity. So, think twice before opting for multiple loans as the non-payment of these loans will lead to bad debts.
People find several reasons to opt for multiple loans but before taking up let’s list down the pros and cons of taking multiple loans at once.
1. Financial security: When we can get money from multiple sources, we get a sense of financial security as we are getting additional money whenever we are in need. This provides financial security to the person and can stay safe from financial issues.
2. Flexibility in the use of money: Loans are used for various purposes and with the option of choosing multiple loans, you can have easy access to funds that can be used wherever you want to. This will give flexibility in using money in financial crises.
3. Don’t have to compromise on dreams: Multiple loans are taken so that you don’t have to compromise on fulfilling your multiple dreams. You can fulfill the dream of buying a home, grow your business, plan for your child’s education and also for your personal needs.
4. Credit score: Your credit score is your crediting source. You can avail loans only if you have a good credit history and a good credit score. Timely payments of EMIs will improve the credit score and only then you can get loans in favourable terms.
1. Paying more: Multiple loans are an easy access to fulfill your needs but what you are missing out is, you tend to pay more amount of money to the lenders than the amount of money that you have borrowed.
2. Payment of EMI: Paying EMIs at once will leave you nothing to save for your future or for your monthly expenses. So, while choosing multiple loans, go for it only if you think you can pay the EMIs and still have money for other expenses or savings.
3. Non-payment affects credit score: Situations are uncertain so, missing the payment of an EMI will negatively hit on your credit score. Missing out an EMI could be for various reasons but don’t let that directly affect your future credibility.
4. Burden of Debt: After going for multiple loan option, the borrower will definitely have to be worried about the amount of money to be repaid. Go for multiple loans only when you are sure that you can pay the amount. Never go for loans if you want to fulfill your luxury needs, go for those loans which can give you a better return in the future.
It’s always better to think twice before opting for multiple loans. Don’t get trapped in the debt cycle by taking a loan to repay the existing loans.
Now that you are aware of the various pros and cons of taking multiple loans, we at Loan Paradise help you out on choosing your loans wisely and let you know which loan suits you better.