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Key takeaways
- It’s possible to take out a second personal loan, but you’ll likely be subject to borrowing caps imposed by the lender.
- The lender may also require you to make a set number of timely, consecutive payments before approving you for a second personal loan.
- Not all lenders allow additional personal loans, so it’s worth inquiring before applying to avoid surprises.
- Conduct a cost-benefit analysis to determine whether a second loan makes sense for your financial situation.
If you take out a personal loan and realize later that you need more money, you may wonder if it’s possible to get another loan. Some lenders will approve you for a second personal loan, but others might not. You will have to shop around and compare rates from different lenders to figure out where you can get a second personal loan.
If you’re considering this option, carefully analyze your finances to determine if you can afford to carry additional debt and make timely payments. You should also understand the potential negative consequences to your credit score and overall financial health from taking out a second personal loan and becoming overextended.
Can I have two personal loans at the same time?
The ability to take out multiple personal loans depends on the lender. Many big online lenders have explicit policies about borrowers applying for multiple personal loans.
LendingClub, for example, says that borrowers can have two loans from the lender simultaneously. The combined maximum outstanding loan amount cannot exceed $50,000 to qualify for a second loan. Prosper and Upstart borrowers must wait six months after receiving their first loan and make six consecutive on-time payments before applying for a second loan. There is also a combined maximum balance of $50,000.
Can you get two loans from the same bank?
It’s possible, but the total amount you can borrow from each lender is generally capped at a certain amount. Some lenders also require you to make a specific number of consecutive payments or wait until a certain amount of time has passed since you took out the first loan.
Does it make sense to have multiple personal loans?
Even if you think you’re eligible for multiple loans, you should think twice before applying. Needing a second personal loan could indicate your finances aren’t in good shape.
Using a personal loan to consolidate and pay off credit card debt could be good. However, if you rack up credit card bills a second time, enough to warrant a second personal loan, the problem could lie with your spending habits or budget.
What to consider before getting another loan
Taking out a second personal loan may be the right choice if you can handle the extra payments, but can pose a risk for some. Your current financial standing and realistic need for more funds can help you determine whether you should take out a second personal loan.
You risk falling into a debt cycle
Be careful of falling victim to a debt cycle where you perpetually take out additional personal loans and dig yourself into a financial hole. If you frequently take out new personal loans and max out credit cards, it might be time to examine your finances. Look at your monthly income and expenses and decide whether there are fundamental changes you could make that would put you on stable financial ground.
Your credit score will be affected
Another major downside to taking out multiple loans is their effect on your credit score. Inquiries on your credit report usually cause a small drop in your credit score, and the additional debt will also ding your score.
Your debt-to-income ratio will increase
As the name suggests, your debt-to-income (DTI) ratio is the percentage of your monthly income used to cover outstanding debt obligations. Lenders and creditors use this figure to determine how much debt you can carry before the default risk becomes too high.
A second personal loan will increase this number, and if you already had a high DTI before applying, you could be rejected for other credit cards and loan products in the future. Generally, you should aim to keep your DTI below 36%.
You will need to wait to access other financing
Too many credit applications or recently opened accounts in a short period is another red flag for lenders. So, taking out a second personal loan could mean you’ll need to wait to access other forms of financing.
Qualifying for another personal loan
To qualify for another personal loan, you must meet a lender’s eligibility requirements. Although each lender has unique qualification metrics, you’ll generally need to rock the following boxes:
- Debt-to-income DTI ratio: This measures your gross monthly income against your monthly debt, expressed as a percentage. For example, if your monthly income is $4,000 and your monthly debt is $1,000, your DTI is 25%. The lower your DTI, the better your approval odds.
- Income: Lenders usually require you to provide financial documents to prove you have enough income to repay the loan.
- Credit: You’ll need an excellent credit score to qualify for a lender’s best rates. It’s possible to get approved for a personal loan with bad credit, but you’re less likely to qualify for a second loan with a low credit score. Plus, your lender will likely charge you a higher interest rate to compensate for the increased risk.
- Collateral: If you’re applying for a secured personal loan, you’ll need to pledge an asset, like a bank account or car title, which your lender can seize if you don’t repay the loan as promised.
How to manage multiple personal loans
To ensure you make timely loan payments, consider signing up for monthly autopay — provided you’re sure you’ll have the funds to cover each payment. Not only can autopay help you manage your personal loans, but many lenders offer rate discounts for enrolling.
Since carrying multiple personal loans isn’t ideal, you should aim to repay the debt as soon as possible by putting extra money toward one of the loans, ideally the one with the highest interest rate. If you pay off that loan early, you’ll save in interest and can put the monthly amount you were paying on the loan toward your other debts or into an emergency fund.
Alternatives to another personal loan
Before taking out a second personal loan, consider these alternatives:
- Dedicated savings account: If the expense you are considering can be delayed, you may be better off by avoiding another personal loan and saving up the money to pay for it instead.
- Debt consolidation loan: Instead of taking out multiple personal loans, you may consider wrapping your existing loan and any additional credit card debt into a single debt consolidation loan.
- Balance transfer credit card: You may be eligible for a balance transfer on a new or existing credit card. Many credit cards offer an introductory period with a 0 percent APR on new purchases and/or transfers, so you can begin paying off debt without additional interest costs.
- Payment plan: If you’re considering a second personal loan to pay a large medical bill, check with your provider to see if it offers a payment plan.
- Buy now, pay later plan (BNPL): This is a viable option for purchases up to $1,500, and you can spread the payments out over a four- to six-week period. Typically, there are no credit checks, and you won’t pay interest or fees through most BNPL apps.
Bottom line
Some lenders offer the option to borrow a second personal loan, but it may not be the best financial choice. If you’re in need of more cash, consider all of your options before taking out a second personal loan. If you do decide to add a second personal loan to your monthly costs, make sure to establish a good payment history on your first loan before applying.
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