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If you already have a personal loan but want to take out another, you may wonder if your lender will allow it. You can have multiple personal loans with some lenders, or you can take out several loans by using different lenders. It simply comes down to the lender's policy and restrictions. Here's what you need to know.
Can You Have More Than One Personal Loan?
The frustrating answer to how many personal loans you can have at the same time is, "It depends." Here's what it depends on:
- How many personal loans you already have with the lender you are applying to. Some limit you to one or two loans.
- The dollar amount you already have in personal loans with the lender. For example, your lender may not cap how many loans you can have, but restrict you to a $50,000 max among all personal loans held with them.
- Your debt-to-income ratio, or whether there's enough money to pay a new bill after your other financial obligations have been taken care of.
- Your credit score and how you have managed paying your previous personal loans.
In the end, approval is up to the lender's discretion. If you get approved for more than one personal loan, you can have more than one loan. One way to do this is to use different lenders. That way, caps on how many loans you can get or how much you can borrow from a given lender won't be determining factors.
You will have to juggle multiple payments, but if you make payments on time, every time, it won't hurt your credit score, and it's likely to help.
Is It a Good Idea to Have Multiple Personal Loans?
It can be a good idea to have more than one personal loan, but it also may be worth exploring other avenues for borrowing the money you need.
If you generally pay your bills on time and are handling the first personal loan well, it could be a good idea to take out another personal loan. Let's say you took out a personal loan to consolidate credit card debt and now you want to borrow for, say, a wedding. A personal loan could be worth considering.
If a personal loan can help you get a better interest rate on debt repayment, it might be worth a look. Be sure you understand how much you are paying in fees and that it's worth it to you.
If personal loans are patches to try to cover a growing gap between your spending and your income, more loans could add to the problem. Instead, it may be smart to talk to a credit counselor about your options.
Before you apply for a second or third personal loan, it's a good idea to check to see if you qualify for a less expensive way to borrow money.
How Do Multiple Personal Loans Affect Your Credit?
How multiple personal loans affect your credit depends on how you manage them.
If you pay on time, multiple personal loans (like any installment loans) can help your credit. Credit scores reward on-time payments.
Applying for multiple personal loans in a short period of time can cause your scores to dip slightly, but any decrease is usually temporary. This happens when a lender checks your credit—called a hard inquiry or hard pull. That kind of credit check can shave a few points off your credit score. However, many lenders will prequalify you using a soft pull, which does not affect your credit, to give you an idea of whether you will qualify for the loan.
If multiple personal loans mean you miss a payment, you could end up paying fees for late payments. If the payments are at least 30 days late and are reported to the credit bureaus, it's likely to hurt your credit. One solution: Put payments on autopay, but only if you always have enough money in your account to cover the payment.
The Bottom Line
If you can get approved, you can have as many personal loans as you want. Some lenders have dollar limits or a limit on how many loans you can have at once, so you may need to use different lenders.
An additional personal loan can be a good idea, but it isn't always. Check other options before you apply for another one. To help you apply for a loan you are likely to be approved for, you can use a matching tool such as Experian CreditMatchTM, which can give you an idea of the interest rate and term you might be offered for the loan you want.