The question of the maximum number of loans a loan customer may have has to be examined from different sides.
Different types of loans
It is very common to pay off several loans if they serve different purposes. The classic is the real estate / car loan constellation. However, various parallel consumer loans such as in the furniture store, electronics store and the bank for used cars are also common, since the relatively low rates of these small loans can be managed for a normal earner.
Credit rating for multiple loans
The decisive factor when considering the limitation of loans is not their number, but rather the resulting sum of the monthly installments and the regular monthly financial resources to service the loans.
So if you are already up to your neck with the repayment of one or more loans and you see your salvation in taking out another loan in order to be able to manage your running costs or the loan installments, there is a risk of over-indebtedness.
As a result, the banks do not carry out their creditworthiness checks in order to harass the credit-willing customer, but rather to protect them against insolvency and, of course, against the default. In addition, lenders are legally obliged to check the creditworthiness of the customer before granting the loan and to take this into account when making the loan decision.
Hiding the existing loan does not help, since the bank can see it immediately via the Credit Bureau query (which you are obliged to apply for when applying for a loan). The bank’s credit calculator then provides a positive or negative credit decision after including all criteria (e.g. the number of years of employment, monthly income and regular expenses).
increase taking out a loan
Before you take out another small loan, you should ask the lender of the existing loan whether you can add the desired amount. With a good credit rating, the bank has no problem with that either. A new loan agreement will then be drawn up to replace the previous one. Of course, this extends the term or the rates increase and in any case you should also try to renegotiate the conditions (e.g. the interest rate), but increasing the amount of a current loan is a sensible instrument when there is an unexpected need for capital.
In addition, it may well be worth considering the possibility of debt restructuring – that is, combining several loans into a single loan. The existing loans will be replaced with a debt rescheduling loan. On the one hand, this can be cheaper due to the current interest rate level, and you can also keep a better overview of your monthly installments by reducing the number of your creditors.
Avoid another loan
Last but not least, we would like to remind you once again and to avoid avoiding another loan as another option. Depending on the reason for the borrowing, this only improves the situation in the short term and possibly limits the financial possibilities for a long time.
A waiver, saving or optimizing your own financial situation may help. In any case, the project should be carefully calculated – and all options should be considered.