Budgeting Debt Loans

How Many Loans Can You Take Out?

Personal loans have come a long way. Years ago, the options for financing big purchases or consolidating debt were minimal. You could either get a credit card (or two) or apply for a loan from a bank. Either of those paths required the borrower to have a good to excellent credit score.  

But have you met a person who has a lot of debt and a stellar credit score? Yeah, neither have we. 

Over the past decade, we have seen the arrival of a new player in the finance game: personal loans. Personal lenders have provided relief for many people who can’t afford a traditional loan from a bank. They come in smaller amounts and have fast application and approval processes. Also, many personal loans are available to people who have not-so-great credit. These factors make a personal loan an accessible and affordable financial tool.  

When you need a loan, sometimes you can underestimate the amount of help you need. And since they’re readily available, many personal loan borrowers consider getting an additional loan—even before their initial loan is paid off. 

But can you take out more than one loan at a time? Well, the answer is yes; you can take out more than one loan simultaneously. But the real question is:  Should you? 

In this blog, we’ll talk about the ins and outs of managing multiple loans at one time and how you can find a solution to your financial problems, even if you have poor credit, and doesn’t keep you in a cycle of debt.  

What Is a Personal Loan 

A personal loan is a loan that can be used to handle different types of debts or purchases. 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. 

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 line offered to you. If you have ever purchased a car, rented a home, or applied for a credit card, you most likely have a credit score. Any potential lender can perform a credit check to get your score from any major credit bureaus.

Your credit score is a three-digit number that gives potential lenders a sort of financial profile about you. It considers the number of credit accounts you have and how strong or weak your payment history is with them. Lenders then use this information to determine whether or not you will receive a personal loan from them.  

Credit scores range from 300-850: 

800-850: Excellent

740-799: Very Good

670-739: Good

580-669: Fair  

300-579: Poor/Bad

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.  

Uses for Personal Loans 

Personal loans are taken out for a few typical reasons: 

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 weddings, dream vacations, and home renovations. 

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. 

Personal drama can also cause a need for a personal loan. Things like divorce, career changes, and moving into a new place can bring about expenses you don’t usually prepare for.  

Student Loans

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.  

Debt Consolidation 

Debt consolidation is a practice where a borrower takes out one personal loan to pay off other debts. 

It’s important to know that debt consolidation 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. Typically, debt consolidation provides lower interest rates and payment plans for the borrower’s overall debt. 

Debt consolidation 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. In addition, by providing a more accessible, single payment plan, debt consolidation can help raise your credit scores and improve your overall financial health.  

How to Handle Multiple Personal Loans 

As we mentioned earlier, it is possible to take out multiple personal loans at the same time. There can be a lot of reasons for this. For example, you may need an additional loan because you underestimated your actual financial need. Or, an emergency can arise where you are again faced with a situation that you can’t immediately afford. Whatever the cause, there are some essential facts that you have to be aware of when you take out more than one personal loan. 

Your Credit Score Could Suffer 

Having more than one active personal loan will affect your credit score. Most likely, it will drop for a while. But then, when you build up a (good) payment history with your new loan, you may see that number bounce back. But, remember that any negative impact on your score will affect the opportunity for future loans or credit needs.  


Having multiple personal loans means having more personal loan payments. And if there comes the 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. 

Personal Loan Alternatives

After considering the best methods for loans, you may realize that a personal loan 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 a personal loan, here are some alternatives: 

Purge and Sell! 

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 trends can enjoy some of the highest-earning garage sales. The junk in your garage may be the white-hot vintage item that everyone is looking for!  

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. Items like jewelry, firearms, and electronics are always in demand. 

Get a Credit Card 

A credit card 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 line of credit, you will only need to pay back $1,000. In addition, there are credit cards available with low-interest rates, and some even offer 0% APR introductory rates.  

Home Equity Loan or HELOC

If you’re a homeowner, you may be able to turn your property’s equity into a financial solution.  

A home equity loan is a loan based on the increased value of your home from the time you bought it. You can use it for anything from home improvements to business purchases and emergency expenses. 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.  

Home Equity Loans and HELOCs use your home as collateral. That makes these options secured loans which are more likely to come with low, fixed interest rates.  


Personal loans are responsible for helping people solve financial problems every day. Not only are they readily available, but they also give people a stable, manageable repayment plan. With economic uncertainty still in the air, it’s easy to see why more and more people are starting to manage multiple personal loans. 

However, anything that is helpful can become harmful if you abuse it. Regardless of the interest rates and terms of any personal loan, there is something that a borrower must remember. When you take on multiple loans, you’re taking on numerous monthly payments. This will take a large amount of your income and make it hard for you to do other important things with that money.

So, if you are thinking about getting multiple personal loans, consider the impact they will have on your life. Even though numerous personal loans can bring relief now, they will be your responsibility for years after. So, when it comes to taking out more than one personal loan, be sure to do it carefully.