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How Many Personal Loans Can You Have At Once

You can have multiple personal loans, as long as your lenders approve it. Here are the pros and cons to know, and how it affects your credit
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Interest Rates Last Update: June 3, 2024
The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Interest Rates Last Update: June 3, 2024

The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.

You can trust the integrity of our unbiased, independent editorial staff. We may, however, receive compensation from the issuers of some products mentioned in this article. Transparency is a core value for us, see how we make money.

Table Of Content

How Many Personal Loans Can I Have?

You can have more than one personal loan as long as the lenders approve them. The lenders consider different factors before approving other personal loans, including credit score, debt-to-income ratio and how you repay your existing loans, and employment history.

Lenders do not decline your application for another loan because you have an existing one. Instead, they may reject your application because of too much debt.

The number of loans you can have from a lender at once depends on the lender's specifications. Some lenders allow you to have several loans, while others limit you to one. Moreover, before applying for another loan, you must evaluate your ability to repay the loan.

multiple personal loans concept
Yes, you can get more than one personal loan. (Photo by diy13/Shutterstock)

Can You Have Many Personal Loans at One Lender?

Lenders have different terms and requirements for qualification for more than one loan.

You can have many personal loans from one lender. Some lenders have a maximum number of loans and a maximum loan amount you can borrow. Others require that you make a certain number of payments before you apply for another loan.

Lenders use different approaches to decide if you are eligible for another loan, including:

Your DTI accounts for all your debt as a fraction of your income. Lenders use your DTI ratio to measure your ability to repay your loan monthly.

Different lenders have different DTI limits, and every time you borrow, you increase your DTI.

If you have a high DTI, some lenders may reject your loan application or approve it at higher rates.

Lenders also consider the effect of your existing loans on your credit score. New loan applications can lead to a temporary reduction in your score.

Therefore, if you apply for many loans within a short period, the negative effect on your score becomes bigger.

For secured personal loans, lenders will assess the value of your collateral to determine if you are eligible for another loan.

Lenders need the assurance that they will pay back their money even if you cannot keep up with the payments.

Lenders consider the term of the loan in deciding whether you qualify for another loan.

Financial circumstances change, and a longer loan term increases the possibility of change in your circumstances.

Most lenders are more comfortable lending you more loans for a shorter period because of the high likelihood of repayment.

Can You Take Out Multiple Personal Loans at One Time?

You can take multiple personal loans at a time as long as the lenders approve them.

If you are considering taking out a second or third loan, it is best to assess your finances to determine if you can make timely repayments.

Also, you need to clearly understand the possible effects on your credit score and general financial well-being.

Most lenders determine your ability to take out multiple loans simultaneously. Some require that you make a given number of payments or wait for a specific period after taking the first loan.

Moreover, some lenders cap the total amount you can borrow when you take out more than one loan.

Multiple Personal Loans Pros and Cons

Getting another personal loan to pay off another debt could be good but could indicate problems with your budget or spending habits.

Here are the pros and cons of multiple personal loans

Pros
Cons
Flexibility
Less Free Money
Multiple Goals
High Chance For Late Payments

Taking multiple loans gives you the flexibility to manage your finances. Also, the loans give access to funds that you can use when and how you want.

When you take multiple loans at the same time, you can meet more than one financial desire at the same time. 

You can use different loans to have a home or car and go on vacation at the same time.

When you take multiple loans at the same time, you are expected to pay the monthly installment at the same time.

. Having little or no money to fulfill other financial obligations can adversely affect your financial objectives.

When you have multiple loans at the same time, there is a possibility of delayed payment. Such delays negatively affect your credit score and future credibility for loans.

When May It Make Sense to Get Two or More Personal Loans?

There are different risks to taking multiple personal loans. For example, the difficulty in managing all the loans can adversely affect your credit score.

Despite the risks, there are cases when it may make sense to get more than one personal loan, including:

  • When you are facing unavoidable expenses. Getting more than one personal loan is sensible if you face inevitable expenses such as essential home repairs and emergency medical costs.
  • When you qualify for a low-interest rate. Getting and repaying more than one personal loan can be undesirable because of the financial strain. Such loans can make sense if you qualify for lower interest rates that help reduce the loan's overall cost.
  • When it is affordable. Taking a second or third personal loan is good if you can comfortably repay it. If you cannot afford to meet the loan's monthly obligations, it would be best to consider alternatives.
When May It Make Sense
When May Not It Make Sense
Facing Unavoidable Expenses
Use It To Pay Another Loan
You Qualify for A Low Interest Rate
You Have Bad Credit
You Can Pay It Off
You're Not Sure About Managing Repayments

When May It Not Make Sense to Get Two or More Personal Loans?

Although it is possible to borrow multiple personal loans, it is not always a good idea. Having multiple personal loans is a bad idea in certain cases, including:

  • When the loan purpose is to pay another loan. If you take more than one loan to pay off an existing one, you have a serious budgeting and spending issues that you cannot solve by taking on more debt.
  • If you are a candidate for bad credit loans. If you are a candidate for bad credit loans, it is almost impossible to get a new loan without affecting your credit. As much as different lenders have different score range requirements, a new loan on your report is more likely to lower your score.
  • If you are not sure about managing monthly repayments. Defaulting on one of your loans or making late payments over time can adversely affect your credit score and make it difficult to get approved for financing in the future.

How Do Multiple Personal Loans Affect Your Credit?

Multiple personal loans affect your credit in different ways.

When you actively apply for a loan, lenders request a credit report from credit bureaus. Such hard credit inquiries take off some points on your FICO score.

The initial loan application lowers your FICO score, but subsequent loans can boost your score if you make timely payments to the lender. Also, when you take multiple personal loans, it increases your credit mix.

Therefore, having multiple loans can increase your credit score.

However, multiple personal loans can adversely affect your credit score if you miss or make late repayments. This is because payment history is a major determinant of your credit score.

Applying for multiple loans and getting either approved or not does not affect your credit beyond the slight reduction from the hard inquiry.

You can avoid the negative effect of multiple loans on your credit by doing your due diligence and having a working repayment plan.

How to Manage Multiple Personal Loans?

If you have more than one personal loan, it does not mean you will be overwhelmed with debt. There are different ways of managing your loans and preventing them from getting out of control.

You can manage your personal loans by doing the following.

  • Prioritizing repayments. Defaulting or making late loan repayments adversely affects your credit score. Therefore, if you are in a situation whereby you have to make tough decisions about your expenses, prioritize repaying your personal loans.
  • Paying off the loan with the highest interest rate. If you pay off the loan with the highest interest rate, you will save interest and use the funds you were using to pay the loan to pay your other loans.
  • Pre-close one loan at a time. You can pre-close the loan with the highest interest rate and other personal loans before your credit cards.
  • Get a debt consolidation. After getting a debt consolidation loan, you can channel all your loans toward the single source. Few financial institutions offer debt consolidation, and you should have a good score and repayment history to get the loan.
  • Do not take small loans to make repayments of other loans. Applying for other loans will affect your credit score leading to loan rejections.

FAQs

There is no limit on how many personal loans you can have at a given time.

However, most lenders limit the number of personal loans a borrower can have between 1-3 loans at a time. The exact number depends on the lender's limitations and the amount of the first loan already repaid.

Yes, you can combine multiple personal loans into a single one. After combining the loans, you will have to worry about one monthly payment in your budget with a single loan. Moreover, you may be able to save money if the single loan attracts a lower interest rate.

Picture of Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
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