Loans give us instant cash to pay for expenses when we need them. There are several types of loans you can take, and two of the most common are personal loans and business loans.
This post discusses the possibility of taking both these loans simultaneously. Today, you can procure an online personal loan or a business loan a lot more easily than you did in the past. Let’s first compare the two types of loans.
Difference Between a Personal Loan and Business Loan
An online personal loan is an unsecured loan that you procure for personal reasons like medical expenses, home renovation, or a child’s education. A business loan is meant to cover business expenses. Business loan amounts are typically higher than personal loan amounts, and you need more documentation to get a business loan.
Can I Take a Personal and a Business Loan Simultaneously?
Absolutely, yes! The key here is to meet the requirements. If you don’t pose a high risk to the lender, they will be ready to sanction a second loan to you. Here are a few conditions for getting a second loan:
Low Debt-to-Income Ratio
Your debt-to-income ratio, as the name suggests, connects your income to your debt. If you have a high income compared to your total debt, it will increase your chances of a second loan. A debt-to-income ratio below 40% is usually acceptable.
Good Repayment Capacity
Of course, your lender is primarily interested in getting their loan amount returned. As a result, they will pay close attention to your financial credentials. Your bank statements, income tax statements, proof of income, and audited profit and loss statements will all come under scrutiny.
Upon examining your documents, if the lender concludes that you have a good repayment capacity, they are likely to give you a second loan readily.
High Credit Score
Your credit score is a three-digit number generated by India’s premium credit reporting agency, TransUnion CIBIL. It reflects whether you have good or bad credit behavior.
If you are financially responsible and do not default on payments, you will have a high credit score. A credit score of 750 or above is considered good and will be looked upon favorably by lenders, increasing your chances for a second loan.
The reputation Of Your Employer
Lenders will probably like you if you work for a well-known, big multinational company rather than a small, unknown, private firm. This is because you will be perceived as having a stable income with job security and can easily repay the loans.
If you have a high income, you have two advantages. Firstly, you can take high loan amounts, and secondly, you can get the lowest interest compared to the current personal loan interest rates.
The lenders will look favorably on you if you have a high income because you will be more likely to have the money to repay two loans simultaneously.
Relationship With Your Lender
If you are an existing customer of the lender, especially with a savings account (or if you have some investments with them), they will send you to an unknown person. Therefore, youYou will get more leverage for a second online personal loan or business loan from a lender.
Your Repayment History
How has your repayment pattern been with previous loans, if any? A lender will delve into your previous financial dealings with a specific focus on whether or not you paid off your loans promptly. If you did that, you are likely to pay them in a similar fashion, which makes you a preferred candidate for a second loan.
You can get a personal loan and a business loan at the same time. However, take care that you meet the conditions that we have outlined here. And, above all, pay attention to the current personal loan interest rates, which tend to be quite high compared to interest rates of other types of loans.
You can take advice and assistance from Fullerton India, a Non-Banking Financial Company (NBFC) from whom you can get loans with competitive pricing, minimal documentation, and digital processing.