Maybe you’re juggling bills and expenses keep stacking up — suddenly you think, “Why not get another loan?” But is taking on multiple personal loans a brilliant strategy or a fast track to financial stress? The short answer: It depends. While there’s no hard-and-fast limit on how many personal loans you can have at once, managing multiple loans requires strategic planning, good credit, and a solid understanding of the risks. Let’s dig into what you need to know before you start piling on those personal loans.
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Can you take out multiple loans?
Yes, you can absolutely take out more than one personal loan at a time — as long as you qualify. Lenders generally don’t have rules against holding multiple loans, but whether or not you can handle multiple loans depends on factors like your credit score, income, and existing debt. The key is that you need to meet the lender’s criteria each time you apply for a new loan, and lenders look at your total debt-to-income (DTI) ratio, payment history, and overall financial stability before approving a new loan. If you have bad credit, getting approved for multiple loans becomes more difficult, and you may face higher interest rates or stricter terms. Keep in mind that each loan application typically triggers a hard credit inquiry, which could ding your credit score slightly. So yes, multiple loans are allowed, but they come with responsibilities.
Pros of having multiple personal loans
But why would anyone want multiple personal loans? Here are a few scenarios where it might make sense:
- Access to more funds: If you have several large expenses that one loan can’t cover, taking out multiple loans might be your solution. It allows you to secure more funding than you would with a single loan.
- Debt management: If you’re consolidating various debts, multiple personal loans can help you organize and pay down your balances with more favorable interest rates.
- Flexible use: Personal loans can be used for almost anything — from medical bills to home renovations. Having multiple loans can offer the flexibility to tackle different financial needs simultaneously.
Cons of having multiple personal loans
It’s not all smooth sailing. There can be downsides to stacking loans:
- Impact on your credit: Applying for multiple loans results in multiple credit inquiries, which can lower your credit score. Plus, juggling multiple payments increases the risk of missing one, which could lead to serious credit damage.
- Increased debt-to-income ratio: Taking on more loans increases your DTI ratio, which could make it harder to qualify for future credit and might lead lenders to see you as a higher risk.
- Multiple payments to manage: With several loans come several payment deadlines. Missing even one payment could lead to late fees, higher interest, and added stress.
How to get multiple personal loans
If you’ve weighed the pros and cons and still think multiple loans are the right move, you have two main options: getting loans from the same lender or from different lenders. Each approach comes with its own set of rules and challenges.
From the same lender
Many lenders allow borrowers to have more than one loan at a time, but approval isn’t guaranteed. You’ll need to demonstrate that you can afford both loans and meet the lender’s criteria for income, credit, and DTI ratio. Some lenders even have caps on how much you can borrow across multiple loans.
- Advantage: Managing your loans is easier since everything is handled by one provider, and you might get better terms as a repeat customer.
- Disadvantage: You’re limited by the lender’s borrowing caps, which might restrict how much you can get in total.
From different lenders
Applying for loans from different lenders can give you more flexibility in terms of borrowing limits and terms, but it’s more complicated. Each lender will assess your creditworthiness independently, which can work for or against you depending on your financial profile.
- Advantage: You can potentially borrow more by splitting your loan amounts across multiple lenders, giving you greater overall access to funds.
- Disadvantage: Managing different payment schedules, interest rates, and lenders can get chaotic and increase your chances of missing a payment.
How do multiple loans impact your credit?
Your credit score will take some hits if you take out multiple loans. Every new loan application typically triggers a hard inquiry, which can lower your score temporarily. If approved, your credit utilization and DTI ratio will increase, which could affect your creditworthiness. On the flip side, making consistent, on-time payments across multiple loans can actually boost your score over time, showing lenders that you’re reliable. The more loans you juggle, the higher the risk of late payments, which could lead to credit score damage that’s tough to repair.
Alternatives to personal loans
Not sold on the idea of taking out multiple loans? Here are some alternatives that might be more manageable.
0% interest credit cards
If you have good credit, you might qualify for a 0% APR credit card, which allows you to borrow interest-free during the introductory period (usually 12 to 18 months). This can be a smart way to finance short-term needs without racking up interest, as long as you pay off the balance before the promotional period ends.
MoneyLion can help you explore a wide variety of credit card options tailored to different needs and preferences.
Home equity loans
For homeowners, a home equity loan offers access to a lump sum of cash based on the value of your home. The interest rates are usually lower than personal loans since the loan is secured by your property. Keep in mind that your home is at risk if you can’t make payments.
Home equity lines of credit (HELOC)
A HELOC is similar to a home equity loan but functions more like a credit card, allowing you to borrow as needed up to a set limit. You only pay interest on what you borrow, and it’s often used for ongoing expenses like home renovations. Again, your home serves as collateral, so there’s risk involved.
Buy now, pay later (BNPL)
BNPL services like Affirm or Afterpay let you split your purchases into manageable payments, often with no interest if paid off within a certain period. This option is great for smaller expenses but may not be suitable for significant financial needs.
Retirement account loan
If you have a 401(k), borrowing against your retirement account is an option. You won’t need to go through a credit check, and the interest you pay goes back into your account. However, tapping into retirement savings has long-term implications, and if you leave your job, you might need to repay the loan quickly.
Personal savings
Sometimes the best way to avoid debt is by using your own savings. While it might be tough to dip into your emergency fund or savings account, it can be a safer move than taking on additional loans.
MoneyLion offers a convenient marketplace to compare high-yield savings accounts from our trusted partners that could help grow your money.
Is Taking on Multiple Loans a Smart Move?
Whether or not you should take out multiple personal loans boils down to your financial situation and long-term goals. While it’s possible to juggle more than one loan, the added financial burden, credit impact, and need for diligent management can make it tricky. Before you commit, explore your alternatives and consider whether consolidating your debts or seeking lower-interest options might be a better route.
FAQ
Can you have 2 loans at once?
Yes, as long as you meet the lender’s approval criteria, you can hold more than one loan simultaneously.
Can you get 2 loans from the same bank?
Yes, some lenders allow multiple loans, but it depends on their specific terms and your financial profile.
Can I get another loan if I already have one?
Yes, but approval depends on your credit score, income, and existing debt obligations.
Can you refinance a personal loan?
Yes, you can refinance a personal loan, which could lower your interest rate or change your repayment terms.
