Taking Multiple Loans: How Many Personal Loans Can You Have At Once?

We might occasionally incur multiple unplanned expenses or encounter a few cash flow problems that might lead us to take on multiple personal loans. For example, taking a payday loan after taking a medical loan.

What are the risks involved and how many personal loans can we take at once?

Read on to find out.

How many personal loans can you have at once?

Personal loans can come in handy if you are struggling with unexpected expenses, such as sudden medical costs and funerals.

While you might require various loans, many legalised money lenders in Singapore actually do not do a second loan. Thus, you will likely have to take out loans from different money lenders, and the amount would be subjected to the loan limit.

How much can you borrow from different lenders in Singapore?

There is a limit to how much you can borrow for unsecured loans, depending on where you get them from.

1. Licensed Moneylenders

For unsecured loans from licensed moneylenders, the amount is capped at $3,000 for Singaporeans and Permanent Residents with an annual income below $20,000.

Foreigners earning less than $10,000 annually have a loan cap of $500, while those earning at least $10,000 but under $20,000 annually can borrow up to $3,000.

If your annual income is $20,000 and above, you can take a loan up to six times your income regardless of your nationality.

2. Banks

When taking an unsecured loan from the bank, MAS stipulates that you can borrow up to 12 times your monthly income. This borrowing limit on unsecured credit by MAS was introduced to help borrowers avoid taking on too much debt. However, if you owe more than 12 times of your monthly income in unsecured credit for more than three consecutive months, you will be unable to apply for further credit.

Risks of taking multiple personal loans

There are various risks of taking multiple loans and these are something we should consider:

1. You might chalk up late Interests and fees

If you don’t repay your loan on time, you can end up chalking up hefty fees and interests.

According to regulations under the Ministry of Law, the maximum late interest that a licensed money lender can charge for late repayment is 4% for each month the loan is repaid late.

Furthermore, money lenders can also impose a late fee that totals up to $60 per month for each month of late repayment. These fees and interests will inevitably add up, and you might end up sinking into even greater debt.

2. It might affect your credit history

If you are taking out a bank loan and fail to repay on time, your credit score might be affected.

A credit score is a number used by lenders as an indicator of how likely borrowers might repay their debt or default on their loan. This scoring system is also used by banks as an assessment, and a low credit score might prevent you from being able to get important loans in the future.

3. Emotional stress

Managing one loan is already a stressful affair and this might be made even more arduous when there are multiple repayment deadlines to handle. This can take a toll on your mental and emotional health.

Tips for borrowers with multiple loans

1. Get help from social service agencies

If you are stuck with multiple loans and are already struggling to repay everything, taking a loan to cover another loan is likely to make matters worse.

In this case, you might want to consider seeking help from social service agencies, such as government financial assistance or credit counseling help. Check out the list of social service agencies you can seek help from here (under point 11).

However, do note that doing so might affect your loan approval in future even if you have already cleared your debts.

2. Take a debt consolidation loan

It is generally not recommended to take multiple loans unless absolutely necessary.

If you have multiple loans to manage, are still able to repay them, but are struggling with juggling the different repayment dates, you can consider taking a debt consolidation loan. It is a debt refinancing option in which you can consolidate all loans into a single one managed by a single financial institution.

This will help reduce your risks of late repayment, and taking this will not affect your ability to take up more loans in the future.

Managing multiple loans?

At Prosper Credit, we offer debt consolidation loans that can help you better manage your existing multiple loans. Let us know what you need, and we will cater our loan accordingly.

Reach out to us now.