It often happens that people take two personal loans at once when needed. Even though taking more than one loan may seem like the best option at a time of need, it can weaken you financially in the future. So if you are taking more than one personal loan at once, you can do smart planning to avoid getting trapped in the debt trap. In such a situation, now we will know what can be the disadvantages of taking two personal loans at once and how to overcome them.

Personal Loan

Personal loans have become a financing solution for everyone in today's time. Whenever there is a need for money, people take personal loans. Personal loans are sometimes taken for medical emergencies, home repairs or to repay debt, etc. But you must have heard that some people take more than one i.e. up to two personal loans at once. Now if you are also taking two personal loans at once, then you are inviting trouble for yourself. Yes, we will know what the big disadvantages of taking two personal loans at once and how to avoid it.

Financial burden
If you are taking two personal loans at the same time when you need money, then the burden of EMI will start weakening you financially. If the EMI of two loans increases, then your budget will be affected and your monthly income may also come under pressure.

Interest will dominate
The interest rates of personal loans are already high. So in such a situation, if you take two personal loans simultaneously, then the total interest cost can increase a lot. Since personal loans are unsecured loans, the interest rate is very high. If the interest cost of two loans increases a lot, then you will gradually get trapped in the debt trap.

Over-borrowing
The benefit of more than one personal loan is that you can take more money according to your needs from banks etc., but do you know that this also increases the risk of over-borrowing (taking more loans than needed). In this, whatever you earn will be spent in repaying the loan and then the opportunity to save becomes almost zero.

Bad effect on credit score
Having more than one personal loan at the same time will increase your credit utilization, which can reduce or spoil your credit score, which can make it difficult to take a loan for anything else or get a credit card in the future.

Understand the payment capacity of the loan.
Before taking a big loan, you must calculate your own debt-to-income (DTI) ratio. If it is more than 40 percent, then it can be a high debt burden, which can cause problems in repayments.

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