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How Many Personal Loans Can You Have at Once?

How Many Personal Loans Can You Have at Once?
Sulaiman Abdur-Rahman
Sulaiman Abdur-RahmanUpdated September 28, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
You can have multiple personal loans at once. Borrowers, in some cases, may apply for and receive two or more personal loans from the same lender, and borrowers may also apply for multiple personal loans across different lenders successfully.You can apply for as many personal loans as you want or need. Some lenders may only approve one personal loan application per customer, but other lenders may approve multiple loans with the same customer if the borrower is considered creditworthy. We provide more details below and explain the risks of taking out multiple personal loans.

Introduction to Personal Loans and Borrowing Limits

A personal loan is a type of loan that can be used for just about any purpose, including home renovations, taking a vacation, or consolidating debt. It is typically unsecured, meaning it is not backed by collateral such as your house or your car. Because of this, interest rates tend to be higher than if you were to take out a home equity line of credit, for example.Interest rates on personal loans, though, are generally lower than they are with credit cards. If you need to make a large, one time purchase, a personal loan can be a good option. Rates are usually fixed, which allows your monthly payment to stay the same over the life of the loan.Personal loans typically range from $1,000 to $50,000, but some lenders may be willing to lend up to $100,000 to borrowers with good credit and a steady stream of income. While there’s no limit on how many personal loans you can get, you may find that you’re capped at a certain amount due to your debt-to-income ratio exceeding the lender’s limit or due to the lender having a limit themselves.Recommended: How Much Can You Borrow With a Personal Loan?

Factors Affecting the Number of Personal Loans

Factors that affect the number of personal loans you can get include:
  • Your credit score. Your credit score is a huge factor in determining if a lender will approve you for the loan and at what interest rate. If your score is on the low-to-average side, you may have trouble qualifying for more than one personal loan.
  • Your debt-to-income ratio. The more debt you have, the higher your debt-to-income ratio will be. At some point, you may no longer qualify for a personal loan because you’ve taken on too much debt.
  • If you already have a personal loan with that lender. Some lenders may cap their personal loans to one or two per customer. Others may have a total loan limit as opposed to a number of loans you can have.

Can You Have More Than One Loan?

Yes, consumers can have more than one personal loan. Some lenders may have restrictions on the number of personal loans one customer can have, while other lenders may have no limits on the number of personal loans one customer can actively carry.Some lenders may have policies specifying when their existing customers can receive more than one loan. A lender, for example, may require customers to wait 90 days after receiving a personal loan or make three consecutive personal loan payments to become eligible to apply for a similar loan product, including home improvement loans.These lenders may also have conditions allowing a customer to have more than one active personal loan account subject to monetary limitations. Some lenders may have a maximum loan limit of $50,000 per customer, in which the customer can receive more than one personal loan but shall not exceed the monetary limit.

Lender Policies and Maximum Loan Limits

From a lender’s perspective, it all comes down to risk. If the lender thinks there’s a chance you won’t be able to repay the loan, they may decide it’s not worth it to lend money to you. This is why lender’s have strict qualification requirements and maximum loan limits. In general, lenders want to see a good credit score, proof of consistent income, and a solid credit history. How much a lender is willing to lend to you will mostly be determined by your debt-to-income ratio. If this gets too high, lenders fear you’ll be unable to make your monthly loan payments.For personal loans, the maximum loan limit is usually no more than $100,000. However, you’ll have to qualify for that amount by having a good credit score and enough income to be able to cover the monthly payment.

Why Taking Out Multiple Loans Can Be Risky

Taking out multiple loans can be risky for the following reasons:

1. It Increases Debt

Taking out a personal loan may increase your debt burden, particularly if you are borrowing for reasons other than debt consolidation. A personal loan can help you pay off existing debt, but taking out multiple loans to make large purchases would increase your debt and could make it harder for you to reach financial freedom.Increasing your monthly personal loan payments may increase your debt-to-income ratio, also known as DTI. Lenders may calculate your debt-to-income ratio to assess your ability to make timely repayments on the money you have borrowed.You can determine your DTI by dividing your total recurring monthly debt by your gross monthly income. Increasing your personal loan repayment obligations without increasing your monthly income would increase your DTI, and that could impact your ability to borrow in the future.Most lenders favor a DTI below 35%, particularly because a low debt-to-income ratio demonstrates a healthy balance between your income and debt compared with high-risk borrowers with high DTI ratios.

2. It May Increase Payment Obligations

Taking out multiple loans can increase your monthly payment obligations, particularly if the borrowed money is used for a purpose other than debt consolidation. This could increase your risk of submitting late payments and can make your personal financial situation harder to manage.When lenders approve personal loan applications, they may report information about those accounts to credit bureaus, including late payments, missed payments, or any defaults. Holding more than one personal loan can force you to spend more time and energy upholding your monthly repayment obligations.An increase in payment obligations can promote financial stress, which in itself poses many risks to one’s mental health. Financial stress can lead to anxiety and depression, according to health professionals, who also warn that ongoing financial stress can lead to poor physical health.

3. It Can Negatively Impact Credit Scores

Taking out multiple loans at once can negatively impact your credit scores. Lenders may conduct a hard inquiry into your credit history each time you apply for a personal loan, and such hard inquiries can reduce your FICO® Score and VantageScore® by several points.As mentioned earlier, having active repayment obligations on multiple personal loan accounts can increase your debt-to-income ratio, and increasing your overall debt repayment obligations can increase the risk of late payments or missed payments. Failing to make timely payments on personal loan accounts can negatively impact your credit scores.A consumer’s credit score reflects a broad set of data, including the average age of the consumer’s credit accounts. Taking out new loans can lower the average age of your credit accounts, and that can negatively impact your credit scores, as well.

4. It May Limit Access to Additional Credit

Taking out multiple personal loans can limit your access to additional credit. Lenders may conduct a risk assessment before making a decision on whether to approve any borrower’s application for new credit.Having two or more personal loan accounts may increase your monthly debt repayment obligations, and carrying more debt can temporarily make it harder for you to access more lending products in the future or harder to find financing at low rates of interest.

When Can Taking Out Multiple Loans Be a Good Idea?

Taking out multiple personal loans can be a good idea in the following scenarios:

1. Debt Consolidation

Taking out multiple loans can be a good idea if the borrowed money goes toward debt consolidation. The average interest rate on a two-year personal loan stood at 11.48% during the second quarter of 2023, whereas the average interest rate on all credit card accounts assessed in that quarter stood at 20.68%.If a consumer has heavy credit card debt, it might be a good idea for that consumer to consider personal loans for debt consolidation, even if that same consumer has existing personal loan debt repayment obligations.

2. Building Credit

Taking out multiple personal loans can also be a good idea if it aligns with a consumer’s financial goals for building credit. If you can afford making monthly repayments on multiple personal loans, taking out several loans can help you build credit in the long run by affirming your financial responsibility.Establishing a solid payment history on all of your accounts can have a positive impact on your credit score and can make it easier for you to apply and get approved for more lending products down the line, including unsecured personal loans or secured personal loans.When weighing unsecured vs secured loans, borrowers with good credit may have an easier time getting approved for an unsecured personal loan compared with borrowers who have poor credit. Borrowers with weak credit may consider applying for a secured personal loan, which is an installment loan that requires borrowers to offer collateral as a condition of approval.

3. Promoting Payment Stability

Taking out multiple loans can also be a good idea if the borrowed money helps the consumer meet regular payments and obligations. If borrowers have existing personal loan debt repayment obligations and find themselves in financial straits and at risk of incurring late payments, it can be a good idea to take out a second personal loan to promote payment stability.Going further into debt to avoid a late payment is not ideal, but it can potentially stave off greater harm. Missing payments and defaulting on a loan could cause borrowers to temporarily lose access to more credit. Cosigned personal loans can help these borrowers stay afloat.

4. Navigating Unexpected Expenses

Taking out multiple personal loans could also be a good idea if the borrowed money helps you meet unexpected expenses. Quick personal loans can help borrowers weather the unexpected expenses of an unforeseen crisis. Such loans can help borrowers pay for emergency car repairs and other unplanned expenses.

Managing Multiple Personal Loans Responsibly

If you do decide to have more than one personal loan at a time, it’s important to manage them responsibly so your credit score isn’t negatively impacted. For starters, keep track of your monthly loan payments and when they are due. A downside of having multiple personal loans as opposed to just one is you have to make multiple payments each month. If you forget to make a payment, your credit score may take a hit.It’s also a good idea to keep your debt-to-income ratio as low as you can. If you max out this ratio (lenders typically like to see debt-to-income ratios no higher than 40%), you’ll struggle with getting financing. If you need financing due to an emergency, you may be out of luck.If you find yourself struggling to keep up with all of your loan payments, you could consider consolidating all of your personal debt with a debt consolidation loan. With this type of loan, you’d pay off your current personal loans, credit cards, and other forms of debt and then make one monthly payment on the new loan.

Personal Loan Alternatives

Here are some alternatives to personal loans:

1. Credit Cards

Credit cards can allow consumers to make small or large purchases on credit. Some credit cards may offer a rewards program that provides cardholders with at least 1% cash back on all purchases.

2. Personal Line of Credit

A personal line of credit may allow consumers to borrow a certain amount of funds for personal spending up to a certain limit. Borrowing money from a personal line of credit is comparable to taking out a personal loan.

3. Payday Loans

Payday loans can provide consumers with small sums of cash, and borrowers are typically expected to repay these bad credit loans in a matter of weeks or months. Payday loans may feature high fees ranging from $10 to $30 for every $100 borrowed, and they also are considered predatory because it’s easy for the borrower to become trapped in a cycle of debt with this type of financing.

The Takeaway

Having multiple personal loans can increase your debt, but taking out several personal loans may also help borrowers stay afloat during tough economic times. Consumers with poor credit can still get approved for consumer lending products.Lantern by SoFi can help you explore personal loan rates and consumer lending options. All you need to do is provide basic information about yourself, and Lantern can guide you in the process of finding and applying for a personal loan product with the lender of your choice.

Frequently Asked Questions

Can I consolidate multiple personal loans into one loan?
Will having multiple personal loans impact my ability to get future loans?
Can I have multiple personal loans if I have a cosigner?
Should I prioritize paying off my existing personal loans before applying for new ones?
Photo credit: iStock/MicroStockHub

About the Author

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and served as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.
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