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Taking out multiple loans is a reality for many borrowers. You may need to finance a major purchase, consolidate debt or cover an emergency expense. While there’s no hard limit on the number of loans you can have lenders do impose restrictions. So can you apply for a loan twice? Let’s take an in-depth look.
How Lender Policies Impact Additional Loan Applications
There are no federal laws limiting the number of loans you can obtain However, individual lenders set their own policies Some allow multiple concurrent loans, while others restrict borrowers to one loan at a time.
For instance, Best Egg permits up to two loans simultaneously, but caps the total at $100,000. LendingClub doesn’t specify a maximum number of loans, but limits total balances to $50,000. Before applying for another loan, always verify the lender’s rules.
Banks may require you to make 3-12 monthly payments before approving a new application. This ensures you can manage the additional debt. If you want to refinance an existing loan into a new, larger one, check that the lender permits this. Some prohibit refinancing their loans.
Key Factors in Qualifying for Multiple Loans
Your eligibility for several loans depends mainly on two key criteria – your credit score and debt-to-income ratio.
Most lenders want a minimum credit score around 580-640 to qualify. The higher your score, the better your chances of approval and loan terms. Multiple loan applications in a short timeframe result in hard inquiries, which slightly ding your score.
Lenders also calculate your debt-to-income ratio (DTI), or the percentage of income allocated to debt payments. A ratio above 40% makes approval difficult. An existing loan raises your DTI, potentially disqualifying you for extra financing.
The Pros and Cons of Multiple Loans
Secondary loans provide access to more capital but aren’t always the best approach. Consider the tradeoffs before moving forward:
Pros
- Fund major purchases by spreading payments over time
- Consolidate high-interest debt into lower-rate loans
- For installment loans, fixed monthly payments aid budgeting
Cons
- Additional loan obligations are inflexible if income drops
- Increased strain on budget from multiple payments
- Hard credit inquiries and higher debt hurt scores
- Difficulty qualifying for future financing like mortgages
Alternatives to Apply For Before a Second Loan
Sometimes alternatives better suit your needs than multiple loans. Assess these options first:
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0% APR credit cards – Delay interest for over a year if you qualify and can pay off in full.
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Home equity loan/line of credit – Tap home equity at low rates, but risk foreclosure if unable to repay.
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401(k) loan – Borrow from your own retirement savings without a credit check. Reduce contributions while repaying.
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Borrow from family/friends – Interest-free financing but can strain relationships if not repaid.
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Cash advance apps – Helpful for small short-term loans but repeated use creates debt cycle.
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Buy now pay later plans – No interest installments but leads to easy overspending.
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Delay major purchases – Save up instead of borrowing now. Avoid debt entirely.
Strategies for Qualifying for an Additional Loan
If you’ve weighed the considerations and still need another loan, follow these tips to improve approval odds:
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Pay down existing debts – Decreases DTI and increases credit availability
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Check your credit – Dispute errors, lower utilization to boost score
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Increase income – Higher earnings make debt more affordable
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Provide collateral – Back loan with an asset to reduce risk
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Bring on a cosigner – Leverage someone else’s stronger credit
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Shorten loan terms – Faster repayment shows greater ability to handle debt
The Bottom Line
It’s possible to take out multiple loans, but lender restrictions, loan costs, and financial risks require careful evaluation. Exhaust other options before burdening yourself with excessive debt. If you’re disciplined and have a plan to repay quickly, a second loan in moderation can be manageable. But it’s best to borrow only what you realistically need and can afford.
Qualifying for a second personal loan
- Debt-to-income ratio: When they review your loan application, most lenders consider your debt-to-income ratio (DTI), which is your monthly debt payments divided by your gross monthly income. Lenders usually look for that number to be about 40% or lower.
- Loan amount: Some lenders allow you to have more than one loan, but they may cap the total amount you can borrow.
- Creditworthiness: Many lenders have minimum credit score requirements to qualify for a loan. Youâre more likely to qualify for a loan with a low interest rate if you have a credit score of 690 or higher.
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FAQ
What happens if I apply for a loan twice?
As stated above, if you apply for multiple loans in a short period, it may damage your credit score and appear as a red flag to lenders.
Can I get approved for a loan if I already have one?
Just because you can have more than one personal loan with a lender doesn’t mean you’ll be approved. However, the lender may be more likely to offer a second personal loan if your existing debt is in good standing – that means you’ve been making on-time, monthly payments in full.
How long should you wait in between loans?
How long should I wait before applying for another loan? Again, this can depend on your bank or lender’s policies. Some lenders require you to wait 3 – 12 months (or make 3 – 12 monthly payments) before you can apply for another loan.
Can I 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. Check your credit report first. There’s a chance that your credit report contains mistakes that could hurt your credit score.
Can you get two personal loans at the same time?
Yes, you can get two personal loans at the same time. There’s no rule that limits the number of personal loans you can have at one time, so you can have two or more. However, if you already have a personal loan, it will be taken into consideration when you apply for another.
Can I have multiple personal loans?
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.
Can I get a second personal loan if I qualify?
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.
What happens if you apply for multiple personal loans?
Credit scores reward on-time payments. Applying for multiple personal loans in a short period of time can cause your scores to dip slightly, but any decrease is usually temporary. This happens when a lender checks your credit—called a hard inquiry or hard pull. That kind of credit check can shave a few points off your credit score.
Can you borrow more than one personal loan at a time?
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.