You may have more than one personal loan at the same time – and there’s no legal limit to how many loans you can take out. But even if a lender allows you to have more than one personal loan, you might not qualify. You generally need to show you have enough room in your budget for additional repayments to get approved.
You also might want to rethink having more than one loan for another reason: Overborrowing. Excess borrowing increases your monthly expenses — along with your risk of default. Legitimate lenders won’t approve your application if they don’t think you can afford repayments. But if you experience changes to your income, you could see multiple negative marks on your credit report.
Avoid overborrowing by calculating how much you can afford to take on before applying for a personal loan — and only applying for that amount.
Can I get another loan if I already have one?
Yes, you may be able to take out a personal loan with another lender if you qualify. But before you can get two loans from the same lender, you may have to pay off part of your initial balance — on time.
To get a second loan, you must meet the eligibility criteria. Here’s what lenders typically look for:
- Credit score. Having a score of 670 and up can help improve your chances of approval for a second loan. But borrowers with credit scores of 740 or higher will have a better chance of approval, plus the best rates and lowest fees.
- Debt-to-income ratio (DTI). To qualify for a second loan, your DTI should ideally be below 36%. This signals to the lender you have room in your budget for a second loan. If your DTI is significantly over this, you may not qualify.
- Income. While there’s no set income requirement for a personal loan, the lender will verify your income to make sure you can meet the new repayments. The loan amount will ultimately determine how much income you need to show.
- Employment. The lender may contact your employer to confirm your employment, including your income and time on the job. Give your HR department a heads-up before they get the call.
Keep in mind that if you already have an unsecured first loan, it could make it harder to qualify for a second one, since the first loan can lower your credit score. To increase your chances of approval, consider adding a cosigner or getting a collateral-backed loan.
5 lenders that offer multiple loans at once
Each lender has its own requirements for how many loans you can take out. Here are some top online lenders’ second-loan policies:
| Lender | Max number of loans | Max loan amount | Criteria for a second loan | |
|---|---|---|---|---|
| Prosper | Two active loans at a time | $50,000 |
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| LendingClub | No set limit on the number of loans | $40,000 |
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| Upstart | Two active loans at a time | $50,000 |
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| Sofi | Two active loans at a time | $100,000 |
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| Laurel Road | No limit |
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Who is most likely to be researching how many loans you can have?
Finder data suggests that men aged 25-34 are most likely to be researching this topic.
| Response | Male (%) | Female (%) |
|---|---|---|
| 65+ | 4.65% | 3.49% |
| 55-64 | 5.23% | 6.83% |
| 45-54 | 7.99% | 7.99% |
| 35-44 | 12.21% | 9.74% |
| 25-34 | 12.79% | 12.65% |
| 18-24 | 8.72% | 7.70% |
Source: Finder sample of 688 visitors using demographics data from Google Analytics
When to take out multiple loans at the same time
While it’s never a good idea to overextend yourself with debt, there are times when taking out a second loan might make sense:
- Emergency expenses. Even with the best of planning, things happen. Borrowing extra cash for necessities like home or car repairs may be necessary to avoid additional problems and stress. Loans also have lower rates than credit cards.
- First loan was too small. Getting a second loan may be a good option if you underestimated the expense you funded with the first loan — like borrowing $10,000 for a kitchen renovation that costs $15,000. In this case, also consider a personal line of credit to avoid under-borrowing again.
- To refinance a loan. When interest rates fall, taking out a second personal loan can make financial sense if you use the funds to pay down the higher interest first loan or pay off your credit cards.
Can having multiple loans affect my credit?
Multiple active loans can hurt your credit in the short term but improve your credit after you’ve paid down your accounts. Here’s why it can negatively affect your credit:
- Increased credit utilization. Taking on more debt increases your credit utilization ratio, which accounts for 30% of your overall score. More debt can lower your credit score until it’s paid down.
- Hard credit checks. These stay on your credit report for a few years. One or two won’t make a huge difference to your credit, but having more than that in a few months will. Lenders will also consider this a red flag and it could affect your ability to get approved.
- Risk of missing payments. Adding to your monthly bills can increase your risk of missing a payment, which will hurt your credit score. Payment history makes up 35% of your credit score.
If you pay down your loans on time, then it can improve your credit score by adding to your history of on-time payments. Using a loan to consolidate your debt can also improve your credit score immediately by helping you pay down your debt more quickly with lower rates and fixed monthly payments.
How to apply for multiple loans at the same time
You can apply for multiple loans at the same time, but it’s not always wise. Applying for multiple loans at the same time could hurt your credit score, since each completed application involves a hard credit check.
But if you’ve decided it makes financial sense to get a second loan, here are four steps you can take to increase your chances of approval:
- Check your credit report first. There’s a chance that your credit report contains mistakes that could hurt your credit score. If you notice anything off, contact the financial institution involved and the credit bureau to have it fixed before you apply for a personal loan.
- Make your repayments on time. Your payment history accounts for over one-third of your credit score. Making all of your payments can increase your credit rating, while missing some payments can cause it to dive.
- Pay off as much debt as you can. The less debt you have, the more attractive you are to lenders. Try waiting as long as you can before taking out a second loan to lower your DTI and up your chances of approval and competitive rates.
- Know how much you can afford. Having an idea of how much you can pay and how much your loan will cost can help you find the right loan. Use our personal loan calculator to find out how much you can borrow.
But if you’re only interested in comparing rates, many lenders offer a prequalification or preapproval application to get an idea of what kind of loan you might get once you apply. Prequalification doesn’t negatively affect your credit score.
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Personal loan alternatives
Getting a second personal loan isn’t your only option for accessing cash. Here are six more alternatives to consider before applying for a loan:
- Personal line of credit (LOC). When you’re not sure how much you need, a line of credit might make more sense than a personal loan. LOCs have a credit card’s flexibility, but typically come with the credit limits and lower rates of a personal loan. Learn about the differences between LOCs and personal loans.
- Home equity line of credit (HELOC). If you have at least 20% in equity in your home, a HELOC can let you borrow against that equity at generally lower rates than a personal loan. HELOCs typically have a 10-year draw period and 20-year repayment period.
- Home equity loan. Home equity loans can also work for people with at least 20% equity in their homes. With a home equity loan, you receive a lump sum payment and pay it back over five to 30 years with fixed-interest monthly payments.
- Credit card cash advances. While not typically recommended as a source of cash due to high rates, credit cards are a convenient way to access cash quickly when you need it. But you’ll be on the hook for a 2.5% to 5% surcharge or a flat fee of $10 for each advance.
- Debt relief. Debt relief is a series of strategies designed to help people get out of debt faster. Debt relief includes credit counseling, debt consolidation loans, debt settlement and even bankruptcy as a last resort.
- Debt settlement. Debt settlement is when an accredited debt settlement company negotiates down your consumer debts. While this can save you money, it does hurt your credit score and stays on your credit report for seven years.
