Key takeaways
- It is possible to have multiple personal loans as long as you have the income and credit score to qualify.
- Lenders typically limit how many personal loans you can have with them at the same time.
- Having multiple personal loans could become unaffordable if you experience a sudden drop in income. Consider alternatives before taking on additional debt.
A personal loan is a type of installment loan, and it’s possible to borrow more than one at a time if you qualify. Funds from personal loans can be used for almost anything. Because they are unsecured, they are typically easier to get approved for than secured loans like mortgages, with funds available, in some cases, the same day you apply.
There is no set rule on how many personal loans you can have at once. As long as you meet the lender’s income, credit score and debt-to-income (DTI) ratio requirements, you may be able to take out multiple personal loans from different lenders.
However, you may not be able to borrow a second loan from the same lender while you are still paying off the first. Knowing the pros and cons of having multiple personal loans can help you decide if it’s worth borrowing more than one.
How many personal loans can you have?
Personal loan lenders don’t typically publish specific rules about how many personal loans you can have at once. Approval usually depends on your credit score and how much of your paycheck is spent on other debt (known as your DTI ratio in lending language).
However, if you want to take out more than one loan with a specific lender, you’ll probably be limited to a few personal loans at once. That’s to reduce the potential losses from one borrower if they are unable to repay the loan due to financial hardship.
Bankrate insight
Other types of installment loans such as mortgages, set limits on how many you can have at once since they are secured by homes. For example, if you’re building a real estate portfolio and want to borrow money to buy several properties, you’ll be limited to 10 loans per borrower.
Personal loans from the same lender
Lenders make their own rules about how many loans they’ll make to a borrower. You can generally find this information in the help or frequently asked questions sections of lenders’ websites.
Some may limit you to a specific number of loans, while others may set a maximum combined loan amount. You may also need to wait a set time period before applying for a second personal loan. For example, you can’t take out more than two loans at a time at Best Egg, and the total for both loans can’t exceed $100,000.
| Lender | Maximum number of loans | Maximum loan amount | Maximum combined limit |
|---|---|---|---|
|
Best Egg |
2 |
$50,000 |
$100,000 |
|
Lending Club |
No limit |
$40,000 |
$50,000 |
|
LendingPoint |
2 |
$36,500 |
None stated |
|
Prosper |
2 |
$50,000 |
$50,000 |
|
SoFi |
2 |
$100,000 |
None stated |
|
Upgrade |
None stated |
$50,000 |
None stated |
|
Upstart |
2 |
$50,000 |
None stated |
What are the risks of having multiple personal loans?
The more personal loans you have, the more fixed payments are taken out of your monthly paycheck. That can create major problems if you have unexpected expenses or a loss of income.
- Increased DTI ratio: Most personal loans come with terms no longer than five years. Multiple personal loans will naturally increase your DTI ratio which could make it hard to qualify for other installment loans to purchase a home or auto.
- No monthly payment flexibility. There’s no minimum monthly payment option like you’ll find with credit cards. You receive all of your funds at once and are required to pay the monthly payments on schedule until the loan is paid off.
- Temporary drop in credit scores. If you apply for multiple loans in a short period, your score could drop more than if you applied for only one loan. Each loan requires a hard credit inquiry.
- Potentially higher interest: Personal loan rates can range between just under seven percent to over 35 percent. If your credit score is fair or bad, you could easily be looking at double-digit bad credit personal loan rates as high or higher than credit cards.
What are the benefits of having multiple personal loans?
Multiple personal loans can be a useful tool if you have very specific goals for them. They give you the predictability of knowing exactly what your monthly payment will be, and how many years it will take to pay the loan off in full.
- Predictable payment budgeting. Personal loans force you to budget for the amount you need and the monthly payment before you take them out. You may spend less on that vacation, inventory order or wedding if you know what the fixed monthly payment looks like in advance.
- Accomplish multiple financial goals. There are very few restrictions on what you can do with multiple personal loans. For example, you could use a personal loan for debt consolidation to pay off high-interest-rate credit cards and a second personal loan to spread out the payments on a new set of tires.
- Improve your score by avoiding revolving debt. One major drawback to carrying revolving debt like credit cards is the damage it can do to your credit utilization ratio. Personal loans are installment loans, and using them instead of credit cards could improve your credit score and force you to consider whether you really want to finance something if it comes with a regular fixed monthly payment.
Should you get another personal loan?
Taking out multiple personal loans makes sense if it’s part of a broader financial plan. It can help you spread out the payments on major purchases, so that you don’t deplete or reduce money you’re putting into emergency savings, retirement accounts or other wealth-building goals.
However, if you find yourself taking out additional personal loans to pay basic expenses or repeatedly consolidate credit cards, it may be time to pause and do a budget review. The ultimate goal should always be to have enough income and assets to meet your financial needs and use debt as a tool toward that goal.
Expert take from the author
When possible, qualify for debt based on one primary source of income, especially if you’re are opting for installment debt.
When the pandemic hit New York City, the area I lived in with my family became very unsafe. We planned to relocate across the country, and we used mostly credit cards to cover the expenses.
I wanted to consolidate some credit card debt after we completed the move, and I also needed to cover some repair expenses on my car. I took out two personal loans with the same company. My wife and I qualified based on our joint income.
Shortly after, a family member became ill, and my wife had to care for her for a few months. During that time, the secondary income dropped to zero.
The lack of flexibility with the payments on two short-term personal loans put a strain on our finances, and I realized this valuable lesson.
Denny Ceizyk, Bankrate, Senior Loans Writer
How to qualify for another personal loan
Lenders consider the same personal loan basic qualifying factors as when you applied the first time. That means you’ll need a good credit score, stable income and an acceptable DTI ratio to qualify.
However, you may run into some extra requirements if you apply for a second loan with the same lender.
- Payment history: Lenders may require that you make payments on time for a set number of months before they offer you a new loan. If this is required, you can typically expect to wait three to 12 months before you can apply for a second loan.
- Payoff restrictions: If you want to use a new loan to pay off a higher-rate existing loan with the same lender, you may want to check to see if the lender allows that. Some lenders (like LightStream) won’t let you pay off or refinance a loan with a new LightStream loan.
- Combined loan caps: Your borrowing power may be limited if you apply for more than one loan with a specific lender. If you need more than the total amount allowed, you may need to apply for the funds from a different company.
Alternatives to multiple personal loans
There are a number of other borrowing options to consider if you need more than one loan.
Bankrate tip: More savings is the best alternative to borrowing
Saving more money is a must-do if you want to build a sound financial foundation. You may not need multiple personal loans – or even a single personal loan – if you’ve got a savings cushion of three to six months in your bank account. If you don’t need money immediately, consider saving up for an expense instead of taking out a loan.
Credit cards
Credit cards are a type of revolving credit that allow you to use, pay off and re-use your available credit as needed. Your payment is only based on the amount of credit you use, rather than a fixed payment schedule. Some cards come with benefits you won’t get from a personal loan, but the drawback is high annual percentage rates (APRs). If you don’t pay the statement balance in full, you may have to pay a substantial amount of interest.
Lines of credit
Lines of credit are similar to credit cards, without the grace period. You have a credit limit, pay interest on what you borrow, then have access to the funds again after you repay. These are best for larger expenses that aren’t set in stone, like home renovations. They offer the same large amount as a personal loan without the strict monthly payment structure.
Mortgages, home equity loans and HELOCs
Homeowners with significant amounts of equity often consider converting that equity to cash with cash-out refinances, home equity loans or home equity lines of credit. The biggest drawback to any type of loan secured by your home is the risk of losing your home to foreclosure if you can’t repay it. Most personal loans are unsecured, which means you don’t risk losing your shelter if you fall on hard financial times.
Bottom line
It is possible to have multiple installment loans, but it’s always best to consider why you need more than one first. If each loan is part of a proactive financial plan that includes specific short-term and long-term savings goals, then it probably makes sense.
However, if you find yourself taking out personal loans to consolidate credit card debt on a regular basis, or to keep the lights on, it may be time to get some financial help from a credit counselor.
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