Personal loans are rapidly becoming one of the most popular types of loans. And there's a good reason for this. Many personal loans have lower interest rates than other kinds of consumer debt. They typically also come with a steady monthly payment and a clear payoff date, and you can generally use them to fund anything you want.
Personal loans can seem like such an attractive way to borrow that you may decide you want to take out more than one. You could find yourself in this situation if, for example, you've borrowed to consolidate debt and then you need to make a big purchase you want to pay off over time.
Whatever the reason, if you're considering taking out multiple personal loans at the same time, you're likely wondering whether that's even possible.
The good news for would-be borrowers who want to take out more than one personal loan at the same time is that there is no rule that says you can't do this.
Theoretically, you could even take out multiple loans from the same lender. However, be aware that different lenders have different restrictions -- some forbid it entirely, while others impose other requirements. These can include a waiting period or a mandate that you've made a certain number of on-time payments on your first loan before getting your second one.
You could also opt to take out personal loans from a few different lenders at one time. But bear in mind that you would need to be able to qualify for each personal loan based on your individual financial situation. It doesn't matter whether you apply for multiple loans from the same lender or from a few different lenders, you still need to meet their requirements.
When you already have one or more personal loans, this debt will show up on your credit report if you apply for another loan. The new lender you're applying with will want to make sure your debt relative to your income isn't too high. If it is, you could be turned down. Monthly payments from both your existing personal loan and the new one you're applying for will be factored in when the lender determines affordability.
If you've applied for lots of loans and it seems you're getting in over your head with debt, you're also unlikely to be able to qualify for the new loan you're trying to take out.
Even if lenders allow you to take out multiple personal loans at the same time, this doesn't mean it's a good idea.
When you take out multiple loans, you're committing to making several monthly payments. This will take a good chunk of your income and make it harder for you to do other important things with your money. The fact that you've taken on lots of obligations could also put you at greater risk of defaulting on your loans.
Every time you apply for a personal loan, the lender will carry out a hard credit check. Too many inquiries in a short time can lower your credit score, making future borrowing more difficult and expensive.
However, if you have emergency expenses and loans are your only option to pay those expenses, don't stress. Taking out multiple loans doesn't mean you're financially doomed. As long as you're careful to make monthly payments on-time and only borrow what you need, taking out multiple loans can be a reasonable strategy to carry you through a difficult financial period.
Personal loans can definitely be a better way to borrow than using credit cards -- but taking on multiple loans at one time can still come at a cost. Be sure you're smart about your borrowing habits and research all of your options carefully so that you don't take on unnecessary debt.
Here are some other questions we've answered:
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.