What are the financial implications of taking multiple short-term loans?

Taking multiple short-term loans can lead to a heavy debt burden and increased financial stress. Each loan comes with its own interest rate, processing fees and EMI schedule, making it difficult to keep track of all repayments. Short-term loans generally carry higher interest rates, so having several at once can push up your total borrowing costs significantly. Managing multiple EMIs can become confusing, increasing the risk of missing payments as well as incurring late fees or penalty charges.

With the RBI’s new rules in 2025, lenders now update credit records every 15 days instead of monthly. This means your borrowing activity is tracked more closely making it harder to take out new loans if you already have several active. Frequent applications and multiple loans can result in more hard enquiries on your credit report, which can lower your credit score. A lower score makes it tougher and more expensive to borrow in the future.

Borrowers with multiple loans also face:

• Higher risk of default due to stretched finances
• Increased chances of falling into a debt trap, where new loans are taken to pay off old ones
• Greater financial strain, leaving little room for emergencies or unexpected expenses
• Negative impact on creditworthiness, making future approvals difficult

Before considering multiple short-term loans, assess your repayment capacity honestly. Consider consolidating debts into a single personal loan if possible. Always aim to keep your debt manageable and borrow only what you can comfortably repay. Responsible borrowing protects your financial stability and long-term credit health.