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Have Multiple Loans On Your Head? A Simple Guide to Managing Them All without Lowering Your CIBIL Score!

At the time of financial distress, you must have taken multiple loans to fund your emergency needs. It is common for large families to have a home loan as well as a car loan or multiple credit accounts to their name.

One reason behind this could be the availability of a wide variety of options and competitive interest rates. However, it is a misconception that if you take multiple loans, you will end up in a debt trap. Following good money management tips will keep your debt from spinning out of control and keep your CIBIL report in check too eventually, you will end up paying the last EMI of your loan with ease. Let’s take a look at some proven tips to manage multiple personal loan accounts

  1. Keep it manageable: First and foremost, make sure that all of your EMIs are paid at a rate that won’t put your other financial commitments in jeopardy. The general recommendation is to not allow more than 40% of your available income to EMI payments. If your monthly income is Rs 30,000, for instance, paying 40% of it would make it difficult for you to manage your other expenses. You may be able to pay even Rs 1,000,000 or more in EMIs if your income is Rs 2,00,000 and you don’t have any dependents or significant debts. To plan and manage your loans, you can use an online term loan calculator.
  1. Make payments on time: Your CIBIL report will suffer whether you default on a single loan or a series of loans. In order to avoid falling into a debt trap, it is best to avoid taking out a new loan in order to pay off an existing one. Ask your lender to extend the repayment period and lower the EMI amount if you are having trouble making payments on several EMIs at once.
  1. Prioritize personal loan EMIs over credit card dues: You should prioritize personal loan EMIs because defaults and late payments on personal loans have a greater impact on your CIBIL report than those on credit cards. Therefore, it is best to pay off your personal loan obligations first and then your credit card account. Your credit score can be significantly lowered by nearly 50 points at a time as a result of personal loan defaults.
  1. Go for a debt consolidation loan: A great way to get rid of debt from many sources is to get a debt consolidation loan and combine all of your debts into one. Obtaining a debt consolidation loan and directing all debt to a single source is one of the steps you could do to get rid of debt from many sources. A debt consolidation loan is not provided by every lender, though, and you must be eligible for one by having a strong credit history and repayment record. You can check your CIBIL report to check for the same. As a result, you must determine whether your lender can provide one. Banks often take a number of things into account before approving a debt consolidation loan, including the applicant’s relationship with the bank, length of credit history, and work stability. Choose a balance transfer or a loan for debt consolidation
  1. Pre-close each loan individually: Closing the loans that close in advance can help clear the clutter. How quickly you can do this will depend on how many debts you have. If you just have two loans, you might be able to pre-close one of them in a few months, but if you have three or more, you might have too many debts. While pre-closing may be your main goal, give your loan accounts priority over your credit card accounts and pre-close the loan account with the highest interest rate first. You can use a term loan calculator to see how much money you can save by paying off the more expensive loans earlier in your tenure. Prioritize preclosing just one loan at a time and learn how to read CIBIL report to see how it has helped you improve your credit score.
  1. Pay strict attention to your spending: The best course of action is to keep an eye on your expenses so you can set aside the money required to pay off your obligations. Make a list of all of your expenses and divide them into necessary and non-essential categories to get started. Rent for a home, electricity costs, tuition, and other costs are all seen as necessities or “needs”. Strive to pay your highest-priority bills first and steer clear of low-priority bills. In this manner, you can save a lot of money while also accelerating the repayment of your debt. In the meanwhile, learn how to read CIBIL report so that you could know how your daily habits are affecting your CIBIL score.
  1. Avoid taking on further credit card debt: Despite having several loan accounts, you are simply increasing your financial load if you keep adding to your credit card debt. The normal annual percentage rate (APR) for credit cards is 35 to 40%. You will be required to make larger minimum payments as your credit card debt increases, which will leave you with very little money left over each month. If you fail to make loan payments, this could become a bigger issue. Avoid accruing more credit card debt.
  1. Avoid getting small loans to finance monthly payments: You could be tempted to take out a small loan to cover the monthly payments on one or more of your debts, but you should resist the urge. Instead, wait to make purchases until you have paid off your debts. Remember that requesting extra loans will lower your credit score as well you will know once you know how to read CIBIL report. 


While personal loan comes with a flexible repayment tenure, not every other loan comes with the same benefit. This means if you do not pay your loan EMI, you could end up getting into a debt trap due to the compounding of interest. The loans with the highest interest rates should be paid off first and you should know how to read CIBIL report in order to see how your small financial habits can affect the CIBIL report.

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