Can You Have Multiple Personal Loans at Once?

Personal loans can be excellent financial tools to consolidate high-interest debt, pay for home improvements, or finance large purchases. But what if you consolidate your debts and then need money for a home improvement or something else? Is it possible to have more than one personal loan at a time?

The short answer

Yes, you can have multiple personal loans at once. If you apply for a personal loan and the company sees another personal loan when performing a credit check, it doesn't necessarily prevent you from getting approved.

Having said that, keep a couple of things in mind. Personal loan approval is generally based on two main factors -- your credit history, and your income relative to your debts.

If you apply for a second (or third, or fourth) personal loan, your income must be sufficient to justify all of your current monthly debt payments plus the new loan. Many lenders have a maximum debt-to-income (DTI) ratio they look for. For example, if a lender's maximum DTI is 45%, this means that all of your existing debts plus the new personal loan payment can't exceed 45% of your pre-tax income. Most personal lenders don't publish a maximum DTI ratio, but that doesn't mean they don't have one.

Second, it's likely that a personal lender will want to see an excellent credit history if you're applying for a second or third personal loan. In other words, you're less likely to get approved for a personal loan if you have a relatively low credit score and you already have a personal loan account.

Having said all of that, individual lenders can set their own policies. Some may not approve you for a personal loan if you have another one outstanding. Others might be fine with multiple personal loans, as long as they don't have another with the same lender. Some lenders might allow you to open more than one personal loan account with them at the same time. So, while there is no industry-wide rule that says whether you can have multiple personal loans, don't be shocked if a particular lender has its own policy on the matter.

One thing to keep in mind is that just because you can qualify for multiple personal loans doesn't necessarily mean that it's a good idea. Personal loan payments are typically much higher than the required minimum payments on credit cards. So if you're using them to consolidate credit card debt, it's especially important to be sure that the monthly payment obligations of all your personal loans won't be too much to handle.

Is having multiple personal loans a good idea for you?

Like most financial topics, there isn't a one-size-fits-all answer here. But in many cases, having multiple personal loans can make a lot of sense.

Here's an example. Let's say you have $50,000 in various credit card debts and higher-interest installment loans you want to consolidate. You shop around for a personal loan by pre-qualifying on several lenders' websites, but the loan company that offers the lowest interest rate with no origination fee only makes loans of up to $40,000. In this situation, it can make sense to accept a $40,000 loan with a lower interest rate and then get a $10,000 personal loan from the lender with the next-lowest rate offer.

Of course, this is just a hypothetical example. But the point is that as long as you can qualify and comfortably afford the payments, getting more than one personal loan could make sense.

Finally, there are alternatives to obtaining multiple personal loans that you might want to look into. For example, if you need to consolidate debt, you could try a credit card with a balance transfer offer. If you need to finance a major purchase, you can find a credit card with a 0% intro APR. You could also consider a home equity line of credit, or HELOC if you're a homeowner.