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You can have multiple personal loans out at once with most of the top personal loan lenders, but should you? Understanding the limits, how or why you should have more than one personal loan, and the consequences of even applying for one is important to know before deciding how you should proceed.
How Many Personal Loans Can You Have at Once?
You might be able to have multiple personal loans at one time. Some lenders even allow you to have multiple loans with them, while others allow multiple personal loans spread out across different lenders.
Rather than looking at how many personal loans you can have at once, it would help to look at how they help your financial situation. What are your goals in taking out these loans? Are the interest rates manageable? Are you borrowing money just because you can?
Keep in mind lenders look at your debt-to-income ratio over the number of loans you have (unless you have more than the law allows). If your DTI is too high, you could have one loan, and that be too much. In general, though, here’s what the top personal loan lenders will allow.
|Lender||# of Loans||Loan Amount|
|LendingClub||2||$40,000 (1 loan) $50,000 (2 loans)|
|Upgrade||See Terms||See Terms|
|Marcus by Goldman Sachs||Unlimited||$40,000|
Risks of Taking Out Multiple Personal Loans
It might seem smart to take out multiple personal loans if you’re trying to achieve certain financial goals, but there are risks you should consider.
Debt-to-Income Ratio Will Increase
Each time you take out a loan, you increase your debt-to-income ratio. Your DTI is a comparison of your monthly debt payments (car loans, personal loans, mortgage loans, and minimum credit card payments) to your gross monthly income (income before taxes).
Each lender has a different DTI threshold they’ll allow, but in general, it can’t be more than 43% in order for you to be able to afford all of your payments.
Much Harder to Manage and Track Payments
It can be hard to manage and track your payments when you have multiple loans, especially across different lenders. If you forget due dates or forget to pay a loan altogether, it can hurt your credit score and cost you more money. The longer your loans go without payment, the more interest they accrue.
Missing a payment is never ideal, and if you miss multiple payments, it can have detrimental effects on your credit score.
Multiple Hard Inquiries
Each time you apply for a personal loan, the lender pulls your credit in what’s called a hard credit inquiry. It shows other lenders that you recently applied for new credit and might have the credit line, even if it’s not reporting on your credit report yet.
Each inquiry is worth around 5 points which doesn’t sound like a lot, but if you have a lot of inquiries on your credit report in the last 12 months, it can be a red flag for lenders.
>> More: Requirements to Get a Personal Loan
You May Get Higher Interest Rates
The more loans you have, the more risk you pose to a lender. As your quantity of loans increases, lenders often charge you higher interest rates to make up for the risk. Personal loans already have somewhat high credit scores, so the increased rate can make it even harder to afford.
Tips for Taking Out a Second Personal Loan
Getting a second personal loan may prove to be harder than applying for the first loan because of the higher risk of default. To increase your chances of approval, try these tips:
- Check your credit. Ensure your credit score is high and hasn’t suffered because of late payments or overextended credit. If you missed any payments, catch up right away and keep your credit card balances at less than 30% of your credit line.
- Keep your other debts manageable. Don’t borrow so much money that you can’t afford the payments. Your debt-to-income ratio shouldn’t exceed 43% when applying for a loan. Pay your credit card balances or personal loans down as much as you can before you apply.
- Shop around for the best deal. Some lenders are more lenient than others when taking out a second personal loan. It doesn’t hurt your credit to get rate quotes, so shop around and see which loan offers the best deal.
- Don’t borrow too much. Only borrow what you need and repay it as fast as you can. Even if you qualify for more than you need, don’t put yourself in over your head in debt.
Is It a Good Idea to Take Out Multiple Personal Loans at One Time?
It’s a personal decision to determine if taking out multiple personal loans at a time makes sense. If you have plenty of room in your debt-to-income ratio and you know you can afford the payments easily, it might make sense.
If you already struggle with the debts you have and miss payments or have to sacrifice to make payments on time, you may want to hold off on another personal loan.
Instead, you might want to consider:
- Asking creditors for a payment plan – Talk to your current creditors about payment plans if you need the loan to get on track with other debts.
- Use a 0% APR credit card – If you have a 0% APR credit card or are eligible for one, consider using it to cover your financial needs, but only if you know, you can pay the full amount off before the 0% APR expires.
- Use your savings – It’s not an ideal situation, but sometimes it’s easier to use your savings and then pay yourself back rather than paying a high-interest rate for a second or third personal loan.
Bottom Line: How Many Personal Loans Can You Have at Once?
You can have multiple personal loans out at once with some lenders, but it’s not always the best idea. Exhaust all of your options and choose multiple personal loans carefully. Think about what it will do to your credit and your finances before taking one and only take out loans you know you can afford.