One of the first things you’ll need to work out is whether your lender will actually let you. Most lenders will not allow you to take out a second loan alongside the first and will want you to repay the original loan first. You do of course have the option of taking out a second loan with a new lender, but they will be able to see that you have a personal loan already running, which may make you a higher risk to them. This will likely mean the interest rates you’re offered will be higher than usual – so this is something to bear in mind.
Although it is possible to have multiple personal loans at once, there are certain risks involved. Here are some things you may wish to consider before taking out a second loan:
Impact on credit score – the more loans you apply for, the more your credit score will be checked. Lenders will be able to see your applications and approvals for other loans, so they may consider you a higher risk.
Debt accumulation – the more loans you have, the more debt you accumulate. You will have high monthly repayments, and a higher debt-to-income ratio. If something happens to your ability to repay your debts, then you could end up in serious financial trouble.
Debt cycles – if you are regularly taking out personal loans or you think you need multiple loans; it could be an indicator you are trapped in a debt cycle. Try and find other ways to finance your personal expenses, for example, debt relief or responsible spending.