A second loan is a type of loan that lets you borrow money against the value of your home. The interest rate is usually lower than the interest rate on a credit card or other unsecured loanmaking it a good option if you need to consolidate debt or make a major purchase.
Unlike a first mortgage, a second personal loan doesn’t require collateral, so if you fail to repay the loan, your lender can’t repossess your home. However, if you have the equity in your home, you may be able to get a lower interest rate by using a second personal loan to consolidate debt or make a major purchase.
One of the most frequently asked questions about a second personal loan is whether it’s best to get it from your current or previous loan provider. Although the answer depends on how your previous loan went, there are some advantages you can enjoy by getting your second loan from the same lender.
Best offers based on your previous payments
Acquiring a second loan from the same lender as your first loan can provide many benefits.
One of these advantages is to unlock incredible offers provided by the lender, given that you have a good payment history on your previous loan. This is why it is strongly recommended that you approach your current lender if you are considering acquiring a new loan. You will be able to get approved for the loan you are applying for easily and quickly rather than getting it from a new loan provider.
You may also get additional benefits that a lending institution only provides to previous or existing borrowers.
Could acquire a better interest rate
Being a recurring borrower does not guarantee you a good personal loan rate. However, if you have a solid credit history and you’re a solid loan seeker, this, combined with the fact that you’ve worked with your lending company before, could pave the way for a good deal.
This is also why you need to make sure that you repay your loans on time to increase your chances of getting the best interest rate once you take out a loan again in the future.
You already know what to expect
Working with a lender from your first loan to the next will give you an idea of ââwhat to expect. Each lender has a different way of processing loan applications and has different requirements.
It will be less stressful for you if you take out your new loan with your current lender, because you are already familiar with and used to the processes. You will be able to acquire the necessary documents and other requirements in advance since you already know what it is.
App could be faster
As you are familiar with the process and requirements, applying for a second personal loan from the same lender may provide you with faster application processing. This is because the lender already knows you and is familiar with your responsibility in repaying your loan. Thus, the approval process for your loan application will go quickly.
How to apply for a second personal loan
Now that you know the benefits, you can enjoy taking out a second personal loan from the same lenders. You might want to consider getting one if you really need the extra cash. Here are the things to remember when applying for a second personal loan.
Find out if you are still eligible to apply with your current lender
Acquiring a second loan from your existing lender can be beneficial. However, considering your previous loan situation, you must first find out if you qualify for a second loan from said lender.
Look for the best option
If you don’t qualify for another loan from your current lender, you should look for another option. Make sure you choose the best lender to give you a second personal loan. You can consult CreditNinja and discover their loan offers adapted to your needs.
Apply for the loan
Once you have found the best lender for you, whether it is your current lender or a new lender, you can now begin the application process. First, apply for the loan by following your instructions according to the lender’s loan process. Next, gather all the requirements and complete all the necessary forms.
Things to consider before taking out a second loan
Taking out a second loan can be tempting. While this has helped many borrowers, you still need to look at your situation and consider things like:
This will impact your credit score
Having multiple loans will impact your credit score. For each loan you request, an in-depth investigation will be carried out on your credit report, causing your score to drop. A thorough investigation usually lasts up to two years on your credit history.
You could be trapped in debt
Too many loans will put you in more debt and keep you trapped. It is always best to pay off existing debts first. Then you acquire an additional loan. However, if it is really necessary to obtain a second loan, such as in an emergency, you must ensure that you pay it back on time.
Are you ready to apply for a second personal loan?
With all the information you have acquired, are you ready to take out a second personal loan? Remember that if you decide to get a second loan, taking it from your existing lender would be more advantageous as long as you are eligible.
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