Can I get a personal loan if I have an existing debt?

Yes, you can apply for a personal loan even if you already have existing debt, but your eligibility will depend on many important factors that lenders closely examine. Most lenders in India assess your overall financial health before approving an additional loan. Here’s what you should keep in mind:

• Debt-to-Income Ratio (DTI): Lenders calculate your DTI which is the percentage of your monthly income that goes in the direction of repaying debts like loans and credit cards. Ideally, your DTI should be below 35%* to 40%*. A high DTI signals that you may be over-leveraged, making lenders cautious about granting more credit.
• Credit Score and History: It is essential to have a clean repayment history and a high credit score (usually 700 or higher). Your chances of being approved may increase if you have a history of making on-time credit card payments and EMI payments.
• Income and Employment: Your monthly income as well as job stability play a big role. Lenders want to ensure you have enough disposable income to handle another EMI without financial strain.
• Existing Debt Load: If you already have significant outstanding loans, the lender may offer you a lower loan amount or a higher interest rate to offset the added risk.
• Documentation: You need to give proof of income, employment and details of your existing loans.

Maintaining a disciplined repayment track record and managing your debts responsibly will improve your chances of getting a personal loan approved, even if you have other ongoing loans.

Disclaimer: Personal loan interest rates are subject to change depending on your credit profile as well as the lender’s policies.