Is it okay to have more than one personal loan?
Need another personal loan? Here’s what you need to know before applying. (iStock)
At best, personal loans can be a powerful financial tool. Many Americans use them to finance a major purchase or for debt consolidation. In fact, according to the latest quarterly industry insights report by TransUnion, 22.2 million people currently have at least one personal loan and the average personal loan is worth $6,690.
With numbers like those, it's certainly not uncommon to have a personal loan. However, you may be wondering whether it’s a good idea to have more than one. To that end, we’ve laid out some guidelines for you below.
If you're considering a personal loan, you can explore your options by visiting an online marketplace like Credible and use it to compare multiple personal loan rates and lenders at once.
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Is it possible to have multiple personal loans at once?
To start, it is possible to get multiple personal loans at once and often, you can even get them from the same loan company. However, it’s important to note that many lenders have strict guidelines for who can receive loan approval and how many loans each individual can have at one time.
In light of that, your first step should be to check in with your lender to see what their company’s stance is on this topic. In the event that you are not an ideal candidate under their policies, it may make sense to borrow loan funds from multiple lenders.
However, whichever lender you choose, it’s likely a good idea to check in with a financial adviser who can help you to decide whether taking on more debt makes sense for you. In general, it’s recommended that people only take out more than one personal loan if they are facing unavoidable expenses, such as emergency medical costs, necessary home repairs or debt consolidation.
If you think a personal loan might be right for you, Credible can help you explore your options. With Credible, you can compare personal loan rates from multiple lenders without affecting your credit score.
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When is having multiple personal loans a bad idea?
Even though it is possible to borrow multiple loan amounts at once, it is not necessarily always a good idea.
For example, many financial experts recommend against taking out multiple consolidation loans at once. In their view, if the loan purpose is to pay off debt for a second time, the issue lies more with the borrower’s budgeting and spending habits, which means that taking on more debt is not likely to help solve the problem.
In the same vein, if you’re a candidate for bad credit loans, you may want to think twice before trying to take out multiple loans. Put simply, there is almost no way to apply for a new loan without affecting your credit. While every lender will have their own acceptable score range, putting a new loan on your credit report is bound to drop your score further.
Lastly, it doesn’t make sense to take out a new loan unless you are absolutely sure that you can manage the monthly payments. Defaulting on the loan or consistently making late payments will negatively impact your credit score and can make it much harder for you to get approved for financing again in the future.
If you’d like to see what your monthly payment could be at different loan amounts, use Credible’s personal loan calculator and then use their online marketplace to access the best personal loan rates.
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The bottom line
Whether you’re just taking out your first personal loan or you’re thinking about applying for another, it’s always a good idea to get a quote first. The quote will give you important information, such as the loan’s rate and what your monthly payment will be at that loan amount. Once you have all that information in hand, you’ll be able to make an informed decision about whether taking out a personal loan makes sense for you.
Visit Credible to get in touch with experienced loan officers and to get your personal loan questions answered.
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