6 Tips For Managing Multiple Personal Loans

If you've been wondering, "Can you have more than one personal loan?", the answer is yes - many individuals have multiple personal loans at once. However, managing them effectively without financial strain can be challenging.

Handling several personal loans simultaneously requires borrowers to balance different interest rates, keep up with multiple EMIs (Equated Monthly Instalments), and stay financially disciplined.

In this article, we'll look at six practical tips to help you manage multiple personal loans effectively and avoid debt pitfalls like high-interest costs and missed payments.

Tip 1: Prioritise Repayments Based on Interest Rates

Having multiple personal loans can be manageable when you prioritise repayments strategically. Start by listing the balance, interest rate, and minimum EMI of each loan. If possible, try the avalanche method where you can allocate extra payments towards the personal loan with the highest interest rate. Once the highest-interest loan is paid off, redirect those funds toward the next highest-interest loan.

Doing so can reduce your overall interest paid over time, helping you eliminate high-cost debts more quickly. This strategy helps you gradually reduce your repayment burden and minimise the risks of multiple personal loans.

Tip 2: Consider Debt Consolidation

If you are managing several personal loans, debt consolidation can help by merging them into a single payment. This option is designed to simplify repayments and can often offer a lower interest rate, making it easier to manage your loans.

However, it is essential to check for associated costs such as processing fees for the new loan or early repayment charges on your existing loans before consolidating multiple personal loans. To ensure debt consolidation is financially beneficial, the interest rate on the consolidated loan should be significantly lower than the average interest rate of your current loans.

Tip 3: Create and Stick to a Budget

Creating and following a detailed budget can help ensure that your multiple personal loan payments fit within your monthly cash flow. Start by calculating your total monthly income and expenses, then set aside specific amounts for each loan.

Aim to cover at least the minimum payment on each loan - and ideally a bit more if possible. Adjust your budget as needed, prioritising essential expenses first, then directing any remaining funds toward loan repayments. A well-structured budget helps prevent overspending, reduces financial stress, and keeps you on track to meet your repayment goals.

Tip 4: Monitor Your Loan Balances

Keeping track of your loan balances helps you stay updated on your progress and identify the personal loans that need more attention. Regularly check the balance, interest accrual, and repayment status of each loan. Tracking these details helps you determine where you stand financially and make informed decisions, such as when to make extra payments on specific loans.

If you have multiple personal loans, monitoring progress can also be motivating as it shows how much debt you've paid off over time. Consider setting reminders or using financial apps to track your loan balances and stay on top of your repayment goals.

Tip 5: Utilise Windfalls for Debt Reduction

Unexpected windfalls, such as bonuses, tax refunds, or gifts, can be directed to your debts. This can help reduce your principal balances faster, which in turn lowers the interest owed over time. Utilising these extra funds to pay off your debts ahead of schedule can be a smart way to manage multiple personal loans effectively.

This approach can be useful for improving repayment schedules without impacting your monthly budgets. Even small windfalls can contribute to long-term interest savings if applied strategically.

Tip 6: Seek Guidance When Needed

If managing multiple personal loans becomes challenging, consider seeking guidance from a reputable financial advisor. These professionals can help you sort through your debt and offer personalised suggestions on topics such as:

• Repayment strategies
• Budgeting
• Debt-relief options

Financial advisors are trained to provide insights tailored to your financial profile. Working with one can provide clarity, reduce stress, and give you a clear roadmap to manage and repay multiple personal loans effectively.

Conclusion

Access to a substantial amount of funds is one of the main benefits of multiple personal loans. However, repaying them on time can be challenging without proper financial planning.

To manage your loans effectively, prioritise higher-interest loans, follow a structured budget, monitor repayment progress, and seek professional advice when needed.

If you're considering consolidation, SMFG India Credit offers personal loans for debt consolidation up to INR 30 lakhs*. We offer competitive interest rates starting from 13%* per annum, with flexible repayment tenures of up to 60 months. Apply online or contact us to find out how our loan options can help simplify your repayment journey.