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Is it Possible to Avail a Loan from Two Banks at the Same Time?

LOAN FROM 2 BANKS

Yes, it is possible to get a loan from two banks at the same time provided you earn high enough to pay the two loans. Besides income, other factors such as credit score, hard credit enquiries, fixed obligations, if any, will also matter. So, if you want to apply successfully at two banks simultaneously, be clear of all these factors. Otherwise, you could face rejections and let your credit score drop drastically. In this post, we will talk about these factors in detail. Let’s get started!

How Does the Income Impact Simultaneous Loan Applications?

The salary or business income dictates greatly the repayment capacity you have to pay a loan. And when we talk about two loans starting at the same time, the importance of income goes up substantially. So, you should earn sufficiently high to service the two loans on time. Lenders check how much the loan EMI will constitute of your income. Ideally, the EMI should not be more than 50% of your net monthly income (NMI). Since there are two loans, lenders could even change the ratio norm.

The Role of Existing Obligations in Two Simultaneous Applications

Existing loan or credit card obligations, if any, will impact your loan eligibility greatly. The EMI/NMI ratio you saw above will also factor in the obligations. With existing obligations, your loan eligibility could reduce. And if the proposed EMI of two loans and the existing obligation leave you with very little, you could face rejection too!

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How Will Hard Credit Enquiries Impact Your Loan Applications?

When you apply for a loan, the concerned lender pulls your credit report from credit bureaus such as CIBIL, Experian, Equifax, CRIF High Mark. The credit report not only tells your credit score but even your repayment history, helping the lender assess your creditworthiness. This is called a hard credit enquiry and lowers your credit score by a few points. But the reduction remains more with a rejection. And with two loans at the same time, there will be two hard enquiries. So, if your credit score before applying for any of the two credits remains on the borderline i.e. around 700, you could face rejection. Your credit score must be very high if you are applying for more than one loan at a time.

Shall You Go for a Pre-approved Personal Loan to Lessen the Impact of Hard Credit Enquiries?

A pre-approved personal loan comes without any formal application. The lender where you have a credit card or salary account will give you this even if you don’t apply. What happens there is the lender checks your credit card repayment track and salary account transactions before deciding your personal loan eligibility. If you are eligible for the loan amount you seek from two banks together, you could avoid two applications and the resulting hard enquiries from lenders. That will further eliminate the possibility of any drop in the credit score.

Conclusion

Applying for a loan at two banks simultaneously is possible if you score well on the points mentioned in this post. However, you should maintain a gap between the credits to ensure less burden on you. The addition of credits is advisable when your income would have grown sufficiently high from the time you apply for the first credit. It will help ensure a smooth repayment and a good credit history for you.

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Fullerton India14.00% - 24.00%
HDFC Bank10.75% - 21.45%
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Tata Capital10.99% - 19.75%
Home Loan Interest Rates July 2021
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Bank of Baroda6.75% - 8.25%
Citibank6.65% - 7.40%
HDFC6.75% - 8.00%
ICICI Bank6.75% - 7.55%
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LIC Housing6.66% - 7.90%
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PNB Housing Finance7.35% - 9.05%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI6.70% - 7.30%
Tata Capital6.90% - 8.75%