Key Takeaways
- You can have multiple personal loans at once, but the number depends on the lender’s policies and your financial health—including credit score, income, and debt-to-income ratio.
- Taking out more than one loan can temporarily lower your credit score, increase financial risk, and lead to default if payments become unmanageable—though on-time payments can help your credit recover over time.
- Alternatives to multiple personal loans include credit cards, home equity loans, HELOCs, and selling personal items to raise funds without additional borrowing.
- Always review loan terms carefully and consider consolidation or budgeting strategies to avoid long-term financial strain from juggling several loan payments.
There is no set limit to how many personal loans you can have at once, and many borrowers qualify for two or more loans depending on their income, credit profile, and lender rules. The real decision is not how many loans you can take out, but whether managing multiple payments fits your budget and financial goals.
Taking out an additional loan can feel necessary, especially when savings are limited or credit options are few. Understanding how multiple loans work helps you avoid overextending yourself.
What Is a Personal Loan?
Personal loan options are the fastest-growing borrowing type.1 And there may be a few reasons for this:
- They come in smaller or large loan amounts and have fast application and approval processes. Typically, they take 1-5 business days!2
- Also, many personal loans are available to people who have not-so-great credit—so there are bad credit loans available.
A personal loan is a loan that can be used to handle different types of debts or purchases, and you may be able to get multiple, sometimes from the same lender. They usually fall under installment loans, which are repaid in steady payments.
Unlike a small business loan or an auto loan, a lender doesn’t provide a personal loan for a specific purpose. Instead, the borrower can use the money for any need in their life. But before applying for a new personal loan and managing multiple personal loans, you should learn more about how personal loans impact your credit scores.
How Many Personal Loans Can I Have?
Usually, you can have as many personal loans as you want. However, there may be limits to how many loans you can have with the same lender, and the maximum dollar amount depends on the lender’s policies.
But, while you can have multiple loans out if you wish, it’s important to consider the negative consequences that can come from accumulating debt. Remember, the more debt you take on, the higher your debt-to-income ratio, or DTI, gets. Your DTI is how much money you owe vs. how much money you make. Experts typically recommend you let your DTI get no higher than 30%.
How to Handle Multiple Personal Loans From The Same Lender
As we mentioned earlier, it is possible to take out multiple personal loans at the same time. There can be a lot of reasons that someone may want to take out a second personal loan or multiple personal loans.
For example, you may need an additional personal loan because you underestimated your actual financial needs. Or, an emergency can arise where you are again faced with a situation that you can’t immediately afford, and you may want to consider multiple personal loans. Whatever the cause, there are some essential facts that you have to be aware of when you take out more than one personal loan:
How Multiple Personal Loans Affect Credit Score?
Having more than one active personal loan can affect your credit score. Most likely, your credit score will drop for a while. This may be for a few reasons, including increasing your debt-to-income ratio and a credit check. But then, when you build up a good payment history with your new loan through on-time payments, you may see that number bounce back on your credit report. However, the opposite can hurt your scores further.
Default With Several Personal Loans
Having multiple personal loans means having more payments. And if there comes a point where you can’t pay those loans back, you may see them go into default. That loan can also be hit with fees and penalties that will leave you responsible for much more money than you borrowed. To avoid default, there are several strategies. Strategies for successful loan repayment can include:
- Making more than the minimum payment
- Prioritizing high-interest loans
- Setting up automatic payments
What Are The Risks Of Multiple Personal Loans?
Risks associated with having multiple personal loans include:
- Increased DTI — A high DTI shows lenders you owe more money than you earn.
- Repayment pressure — Paying back multiple loans can create a strain on your budget, which can get stressful.
- Impact on credit score — Increased debt may cause your credit to drop, especially if you miss payments.
- High interest rates — If your credit score isn’t very high, you may have to deal with higher interest rates on loans.
What Are The Benefits of Multiple Loans?
Potential benefits of multiple loans include:
- Rapid access to funds — Personal loans often have fast approval and funding times.
- Credit-building opportunities — Those who demonstrate positive payment history may see an increase in credit after they pay off their loan.
Personal Loans and Your Credit Score
While many loans have different interest rates and terms, all of them are based on credit scores.
A credit score reflects the overall likelihood of you being able to repay any money lent or credit limit offered to you. Any potential lender can perform a credit check to get your score from any major credit bureaus.
The better your score, the higher your chances of getting a personal loan with low-interest rates and reasonable repayment terms. Conversely, lower scores are usually met with higher interest rates and shorter loan terms. Since bad credit can also mean a bad debt-to-income ratio, lenders see these types of consumers as high-risk.
Fortunately, you can get a personal loan with good and bad credit. And like any loan, they can make life a little easier.
How To Qualify For Another Personal Loan?
Qualifying for multiple personal loan products will depend mostly on your current debts, gross monthly income, and financial history. Lenders will want to know you earn enough money to cover your current debts, and that you have a history of being a responsible and reliable borrower.
Payment History
Demonstrate you have a consistent history of making your due payments on time to increase your chances of loan approval. Lenders will want to see that you are a responsible borrower who they can trust to pay back their loan on time.
Payoff Restrictions
Typically, you can use your loan to pay for whatever you want. However, some lenders have restrictions on borrowers who are planning on using their loan to pay off another loan.
Combined Loans
Instead of applying for multiple loans with the same lenders, it is probably a better idea to refinance your existing personal loan into a new one. Depending on the lender and your financial situation, you may be able to get more money as well.
Uses for Personal Loans
Personal loans are taken out for a few typical reasons, usually for an unexpected expense, and they don’t have money in their bank account, continue reading to learn more about personal loan uses:
| Use Category | Description of Personal Loan Use |
| Large Purchases | Personal loans can be used to finance large purchases such as cars, home renovations, or expensive appliances. |
| Emergencies and Life Changes | Personal loans can provide a financial buffer in case of emergencies like medical expenses, job loss, or unexpected major repairs. |
| Higher Educational Expenses | Personal loans can be used to cover higher education expenses, including tuition, accommodation, books, and other related costs. |
| Debt Consolidation | Personal loans are often used to consolidate multiple debts into a single loan with one monthly payment. |
Personal Loan Can Be Used for Large Purchases
People are often borrowing for things that they can’t afford to pay for all at once. For example, personal loans regularly fund down payments for large purchases, medical bills, home repairs, and more. And because these are usually fixed-rate loans, they can be easy to repay.
Emergencies and Life Changes
Personal loans can help fill the budget holes caused by the things we can’t predict. For example, unexpected medical emergencies and sudden job loss are big reasons people take out personal loans.
Higher Educational Expenses
Student loans help you to pay for college tuition and other costs. These loans are offered through private and through the federal government. Federal student loans are the most popular loans, but they have restrictions. For example, many of them require the borrower to use them solely for tuition. On the other hand, private lending options can help students pay for other essential expenses, like housing and supplies.
Consolidate Debt
This is a practice where a borrower takes out one personal loan to pay off other debts.
It’s important to know that when you consolidate debt, it doesn’t get rid of your debt. Essentially, a debt consolidation company would buy all of your other debt and then charge the borrower a single monthly payment with interest. This strategy is one of the top uses for personal loans because it allows borrowers to:
- Decrease the number of outstanding loans—and loan payments—that they have to manage.
- Obtain a more accessible single-payment plan.
- Help raise your credit scores and improve your overall financial health.
Alternatives To Multiple Loans
Alternatives to multiple loans include dipping into your savings, getting a debt consolidation loan, or getting a side gig to earn some extra income.
After asking yourself how many personal loans you can have and considering the best methods for loans, you may realize that one of these options may not be the best option for you. But that decision doesn’t erase your financial need. So, if you don’t want to take out an additional personal loan, here are some alternatives:
Purge and Sell Instead of Multiple Loans!
If you’re looking to make some cash, it may be time to start getting your garage sale organized. Selling your old and unwanted stuff is one of the most profitable ways to make money. In addition, sellers who keep up with current financial trends can enjoy some of the highest-earning garage sales.
If you don’t want to do the hard hustle yourself, consider taking your things to a consignment store. These types of boutiques will display and sell your stuff and share the profits with you.
Another way to sell stuff fast is at your local pawn shop. Instead of pawning your items for a short-term loan, you may be able to sell them directly to the shop.
Get a Credit Card Instead of More Personal Loans
Credit card debt will allow you to manage a line of credit instead of a lump sum of money. For example:
- If you take out a $2,000 personal loan, you will have to repay that total amount. But if you only use $1,000 of a $2,000 credit limit, you will only need to pay back $1,000 and will only be paying interest on that $1,000.
In addition, there are credit cards available with low interest rates, and some even offer 0% APR introductory rates. However, credit card debt can quickly add up after that introductory offer is over, especially on top of a first personal loan. And a credit card cash advance will have even higher interest rates than using credit card debt or a personal loan.
Home Equity Loan or HELOC
A home equity loan is a loan based on the increased value of your home from the time you bought it.
A HELOC (Home equity line of credit) gives you credit instead of cash, unlike an equity loan! And just like a credit card, a HELOC only requires you to pay back the amount of credit that you use.
A home equity loan and a home equity line of credit use your home as collateral. That makes these options secured loans, which are more likely to come with low, fixed interest rates.
FAQs About How Many Personal Loans Can You Have
Here is more information on frequently asked questions about how many personal loans and how many loans, in general, a person can have.
Do most lenders allow you to take out more than three loans at one time?
Generally, most lenders have policies limiting how many loans a borrower can have at one time, even if you are inquiring with the same lender. However, this can vary depending on the lender and the borrower’s financial situation, such as debt-to-income ratio, credit score, credit report information, income, and more.
Should I always read the terms and conditions of any loan before signing the agreement?
Absolutely, it’s crucial to understand the terms and conditions of any loan agreement before signing. This includes understanding the interest rate, repayment terms, and any potential penalties for late or missed payments.
Can the type of loan I’m applying for affect how many loans I can have at one time?
Yes, the type of loan can influence the number of loans you can have. Some types of loans, like mortgages or auto loans, may have different policies compared to personal loans or credit cards.
Can I have more than three loans if I have a good credit score and a stable financial situation?
While having a good credit score and a stable financial situation can improve your chances of getting approved for a loan, the number of loans you can have at one time will still depend on the lender’s policies.
Are there any personal loan forgiveness programs available?
Loan forgiveness programs are often available for certain types of loans, like student loans. Resources and support for managing loans that cannot be forgiven can be found through financial advisors, credit counseling services, and online resources. It’s important to research and utilize these resources to make informed decisions about managing your loans.
CreditNinja’s Thoughts on Multiple Loans
So, if you are thinking about getting multiple personal loans, consider the impact they will have on your life. Even though multiple loans can bring relief now, it will be your responsibility to juggle multiple monthly payments for years after. So, when it comes to taking out multiple loans, be sure to do it carefully.
References:
- The Average Personal Loan Balance Rose 7% in 2022 | Experian
- How much time it takes to fund a personal | NYPost
