Can you take a second personal loan while repaying the first?

It is possible to get a second personal loan even if you are already paying off another, but there are certain things that you should keep in mind before you put in your application.

Need extra funds while still repaying an existing personal loan? It is possible to get a second personal loan even if you are already paying off another, but there are certain things that you should keep in mind before you put in your application.

Lenders check your ability to repay

Your lender will look at your income, your payments and credit history before accepting your application for a second loan. If your debt-to-income (DTI) ratio is high, meaning that you are already paying more than 40-50% of your income monthly in EMIs, the chances of you getting approved for a second loan are less. Lenders will check your payment history, whether you have a regular income, and credit score that is above 700. They will also verify your existing loan details, EMI, and tenure to determine whether you are in a position to repay another loan or not.

It can impact your credit score

Every new loan application you make means a “hard inquiry” is put on your credit report, thus reducing your credit score. Any late or missed payment of EMI will further reduce your credit score, making it difficult in future for you to apply for any loans or credit cards, etc.

Second loans carry more interest

In case your DTI ratio is high, your second loan will come at a higher interest rate, if at all, as the lender now sees you as a riskier borrower. The loan amount sanctioned to you may also be less than what you applied for. Compare your options among different banks or pre-approved loan options by your current lender—it may be a better to just top-up your original loan.

Think of consolidating instead

If you are taking a second loan to repay your other debts or to get some working capital, the better bet would be debt consolidation instead. Some banks also offer lower interest rate on top-ups or balance transfers. This means you can group your EMIs together and extend the repayment period, even though you would be paying more interest.

Think long term before you borrow again

Before you take out a second personal loan, ask yourself if the cost is unavoidable or can be managed with some discipline. Take only what you can repay in full and on time—and always leave some space for emergencies.

FAQs

1. Will my first loan affect my chances of getting a second personal loan? Yes. Lenders look at your existing loan’s EMI, your repayment track record, and your overall debt-to-income (DTI) ratio. If your current EMIs take up a large part of your monthly income, your chances of approval for a second loan may reduce.

2. Is it better to take a second personal loan or a top-up loan? If your existing lender offers a top-up loan at a lower interest rate and simpler paperwork, it may

be a better option than applying for a new personal loan. Top-up loans are usually faster to process and may offer lower rates if your repayment history is strong.

3. Will a second personal loan hurt my credit score? It can, especially if you miss EMIs or apply to multiple lenders at once. Each application triggers a hard inquiry, which can temporarily reduce your credit score. Always maintain discipline in repayments and avoid over-borrowing to protect your credit health.