The personal loan is mainly opted by individuals so as to meet the emergency requirements and serve the required purpose of the financial need. People often reach out banks for personal loans when they are short of funds and need an immediate help that would cater to their financial needs and requirements. Applying for personal loans at multiple banks all at the same time is common for many borrowers and the reasons for the same might be many. Out of which these two are most common:
- People are in an immediate requirement of money and are looking out for different sources all at the same time. They might do this so as to avail the loan from at least one of the sources where they have applied for the loan.
- There are certain applicants who might be in need of more money than they can get from a single source and so they wish to raise a greater amount by availing the loan from different sources.
There are several pros which are associated with such a phase which are as follows:
Applying at multiple destinations automatically increase the chance of getting hold of the desired amount within the set time frame from at least one of the banks where you have applied for the application. During the process, if more than one bank happens to approve the loan, then a huge amount can be raised within a short span of time to meet the urgency. This is helpful for those who are starting a business and need immediate financial assistance to cater to the expenditures.
However, there are cons of availing the loan from multiple banks as well and need to be given equal importance:
Although applying at different banks at the same time is a good step to garner huge financial assistance, but at times, doing so might affect the chances of loan confirmation. This is mainly because many banks today rely on the credit rating of the borrower with the help of CIBIL scores.
When an individual applies for the personal loans at different banks, the same gets reflected in the CIBIL report which makes the lender reconsider their option of the loan approval. And, this is where the issues might arise during the loan approval.
Apart from this, if the application is rejected by the bank, the credit rating might suffer significantly and make it difficult for the borrower to get hold of the loan when they need it the most.
The CIBIL credit rating might show negative results if one applies for a loan at different banks at the same time. On the other hand for those who have no credit history and are applying for the loan for the very first time, the credibility might zero.
One solution to this process is to explore different possibilities with multiple banks and select the one where there are chances of getting immediate approval. Take an action and collect the required information from multiple lenders, understand the terms and conditions of the loan agreement and select the one with the minimum fee and rate of interest. Once you are done with all the documentation and agreement procedures, apply for the loan that would best suit your needs and provide you with the best deals. However, one thing that is often advised by the experts is not to hurry when it comes to securing the funds as that might create financial constraints and obstacles in the near future.