Are You Allowed to Take Out Multiple Personal Loans at the Same Time?

Personal loans can be a great way to borrow money.

When you take out a personal loan, you'll generally pay a lower interest rate than if you had used a credit card to charge items. The average personal loan rate is 12.17% as of August 2023 versus an average credit card rate of 21.19%. The money will also be deposited as a lump sum into your bank account and you can do anything you want with it.

Since personal loans have many benefits, sometimes you might want to take on multiple loans at the same time -- perhaps to accomplish different goals. The big question, though, is whether lenders will allow this.

Can you take out multiple personal loans?

Generally, it's possible to take out multiple personal loans at the same time. You may even be able to get several loans from the same lender. If you've borrowed with SoFi Personal Loans, for example, you are allowed to take out another loan even while you still have one outstanding -- as long as you have made three consecutive scheduled payments with the lender.

If your lender doesn't allow you to take out a second (or subsequent) loan once you have already borrowed, you still have the option of applying for new debt with a different lender. As long as you meet that lender's qualifying criteria, you should be able to get approved to borrow again.

The big issue, though, is that no lender is going to give you multiple personal loans if you are in danger of getting in over your head with borrowing. So, whether you want several loans from the same financial institution or different ones, you'll need to meet your lender's eligibility requirements.

Lenders generally compare your total debt relative to your income when deciding if you can borrow. Although specific requirements vary by lender, most lenders usually want your total debt payments to be below 35% to 40% of your income. This includes all personal loans and other creditors as well.

If your existing personal loan is small relative to what you earn, you're more likely to be approved to borrow again. On the other hand, if you make $5,000 a month and your existing personal loans, mortgage, car payments, and debt add up to $3,500, your debt-to-income ratio of 70% is likely to cause lenders to turn you down to borrow.

Should you take out multiple personal loans?

If you're eligible to take out multiple personal loans based on the lender's qualifying requirements, then you will still need to decide if it's a good decision.

If you are borrowing for an important goal -- especially one likely to increase your net worth -- then moving forward with taking out multiple personal loans at the same time could make sense, as long as you're offered a reasonable interest rate on all of the debts. Also make sure you can easily afford the monthly payments (keep your total debt obligations below around 35% to 40% of income).

But, keep in mind, borrowing is always more expensive than paying cash because you get stuck paying interest. So, rather than jumping into taking out multiple personal loans for different goals, it may be worth trying to save up and pay cash for some things. While this can take a little more time, you won't have to worry about juggling multiple loan payments each month or committing so much of your income to covering debt.

Remember, just because you can doesn't mean you should. Consider the impact of an additional personal loan on your monthly cash available and your ability to use your funds to accomplish the goals most important to you.