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How Many Personal Loans Can You Have at Once?
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Most lenders don’t set a limit on how many personal loans you can have at once. Instead, they’ll typically set a maximum amount you’d be able to borrow.
That said, it’s usually not a good idea to borrow money left and right. While there are plenty of lenders who’ll issue you more than one personal loan, you should have a realistic plan for how you’ll pay back the debt anytime you decide to take out a new loan.
- Can you have multiple personal loans at once?
- How many loans can you have from the same lender?
- What restrictions on personal loans should you check before applying?
- What should you watch out for when applying for multiple personal loans?
- Can multiple personal loans make sense?
- How can you boost your chances of getting approved for a second loan?
- What are some alternatives to personal loans?
Can you have multiple personal loans at once?
Yes. Many lenders allow multiple outstanding personal loans. You can take out a personal loan from multiple banks or online lenders, as long as you qualify. If you already have a lot of outstanding debt, however, a lender might not approve you for an additional loan.
How many loans can you have from the same lender?
Each lender has its own policies regarding personal loans. Some have limits on the quantity or the total amount borrowed, while others do not. Keep in mind that even for lenders that allow multiple personal loans, you may not be approved if outstanding debt is negatively impacting your credit score.
Here are some policies from leading personal loan lenders:
|Lender||How many loans you can borrow||How much you can borrow|
|Wells Fargo Bank||No limit||$100,000|
Some lenders set certain requirements before you can take out an additional loan. Best Egg, for instance, will only lend an additional loan if your first loan is in good standing. Prosper recommends making at least six months of on-time payments on your first loan before applying for another one. Meanwhile, American Express says you’ll need to wait 60 days from borrowing the first loan before you’re eligible to take out another.
If you owe a personal loan to a different lender, that won’t necessarily disqualify you from borrowing from a new one. Most lenders look at your debts, repayment history, credit score and other factors to determine if you qualify for a loan.
What restrictions on personal loans should you check before applying?
If you’re researching lenders and want the option of picking up a second personal loan in the future, you’ll want to contact the lender directly or seek out information on how many personal loans you can have at once on their website. Different lenders will have different restrictions.
Wells Fargo Bank, for example, doesn’t have any limits on the number of personal loans you can have at one time. Others, including Avant and Rocket Loans, only allow you to have one outstanding loan. And you may find that some lenders don’t provide details about their loan policies online — that’s where contacting the lender’s customer service directly can come in handy.
What should you watch out for when applying for multiple personal loans?
- Your credit will be affected. Applying for a new loan will result in a hard inquiry, which causes a dip in your credit score. While inquiries only make up 10% of your FICO Score, they can have a significant impact if you’ve only recently established credit. The more inquiries, the greater the risk of a low credit score — so carefully consider your credit score before taking out a second personal loan.
- Your debt-to-income ratio will increase. Not only will the amount you owe have an impact on your credit score, but it may also make you ineligible for a new loan. To calculate your debt-to-income ratio, divide your total monthly debt payments by your gross monthly income and multiply the answer by 100 to get the percentage. If you think you’ll need to borrow again in the future, be careful not to drive up your debt-to-income ratio too high.
- You might get a higher interest rate on your second loan. If your credit score is worse than it was when you applied for your first personal loan (which it’ll likely be — you’ve taken on more debt, and that’s after incurring a hard inquiry), the lender will see you as a greater risk than when you applied for your first loan. That means you could get stuck with a high APR that may make the loan difficult to repay.
- You might fall into a debt trap. Juggling multiple debts can cause financial stress and strain on your income. The more of your money you put towards debt repayment, the less you’ll have to cover your monthly expenses. If you start falling behind on your bills and borrow more just to keep up with costs, you could end up stuck in an insurmountable cycle of debt.
- A second loan could leave you financially fragile. You may have enough income to cover multiple monthly payments now, but what if you experience a drop in income, job loss or another setback? Having outstanding debt leaves you vulnerable to these unexpected events.
Can multiple personal loans make sense?
There are certain situations where it makes sense to take out multiple personal loans. For example, if you already took out a personal loan to consolidate credit card debt, but you’re now facing unexpected expenses like auto repairs, it might make sense to apply for a second loan.
Or, if you took out a personal loan for a large expense like a wedding, and you now need to cover the cost of home remodeling so you can sell your home at a higher value, it might make sense to take out another loan for that purpose. However, you should never borrow more than you can afford to pay back.
How can you boost your chances of getting approved for a second loan?
- Check your credit report. Before you apply, assess your chances of getting approved by looking at recent changes to your credit score.
- Stay on top of your payments. Some lenders require a number of consecutive, on-time payments before you can be approved for a second loan. Even for those who don’t, a history of on-time payments will help your odds of approval.
- Pay off other debts. The more you can reduce your debt-to-income ratio, the better. Try paying off all your credit cards before applying for a second personal loan.
- Increase your income or keep it steady. At the very least, you should maintain a steady income. If you’re struggling to keep up with your expenses and pay off your debts, it might be a good idea to get a second job or side hustle to help you get back on track financially.
- Don’t over-borrow. Calculate exactly how much money you need and how much you can afford to pay back, and don’t ask for too much.
- Consider a cosigner. If your credit score has dropped since you applied for your first loan, consider asking someone with excellent credit to cosign on a loan for you. You’ll get approved for a loan with a lower interest rate, which means you’ll be able to pay it back faster.
- Find the best lender for you. Some lenders focus on loans for specific purposes, some are geared toward people within a certain credit range and some others have specific requirements. Finding a lender that’s the best fit for you will help you improve your approval odds.
What are some alternatives to personal loans?
While personal loans can help you cover a big or unexpected expense, it might not make sense to borrow multiple personal loans at once. Here are some alternatives to consider before you take out another loan:
Home equity loan or line of credit
If you don’t absolutely need to cover the expense right away, consider saving up for it. That way, you won’t have to take on debt or pay interest charges that will make your expense cost even more in the long run.
0% APR credit card
Another option is to apply for a credit card with a promotional period of 0% APR. Some cards let you pay off your purchases interest-free for a year or more. Just make sure you’ve paid off the balance before the promotional period ends and interest charges kick in. You’ll likely need a strong credit score to qualify for these offers.
Depending on your purchase, you might be able to work out a payment plan with the store or service provider. For example, many doctors and dentists offer payment plans so you can pay off your bill over time without having to borrow a loan for it.
A secured or cosigned loan
While borrowers with strong credit might qualify for competitive rates on an unsecured personal loan, those with lower credit scores might consider a secured or cosigned loan. By backing your loan with collateral or adding a cosigner to your application, you might be able to get better rates.
Make sure to calculate your monthly payments before borrowing, however, as you wouldn’t want to risk your collateral or damage your cosigner’s finances by falling behind.
Credit card cash advance
Another option to consider is a credit card cash advance. You can typically borrow as much as 30% of your credit limit. While this approach can be an easy way to get fast cash, credit card advances can be costly. The credit card issuer might charge a high APR on the amount, as well as a fee for the transaction.
Home equity loan or line of credit
Finally, homeowners could consider borrowing against the equity in their home with a home equity loan or home equity line of credit (HELOC). To qualify, you’ll typically need at least 15% to 20% equity built up in your home.
A home equity loan gives you a lump sum of money upfront, whereas a line of credit allows you to withdraw a certain amount. After repaying that amount, you can draw on your HELOC again.
Interest rates on home equity loans and HELOCs are often lower than ones you’ll find on personal loans, but be careful of the risk. Because you’re using your home as collateral, a bank could repossess it if you default on payments.
This guide explains more on the difference between home equity loans and personal loans, so you can decide which, if either, is right for you.