How to get a second personal loan and is it a good idea? | finder.com?

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Can I take out two personal loans at once?

Taking out multiple personal loans is sometimes possible, but make sure you can afford the extra cost.

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There's no legal limit to how many loans you can take out at the same time. But even if your lender allows you to have more than one personal loan at once, you might not qualify. You generally need to show you have enough room in your budget for additional repayments to get approved.

Can I get another personal loan if I already have one?

Yes, you can usually take out another personal loan with another lender. And some even allow you to take out a second loan before you've repaid the first. Usually, you have to pay off part of your initial balance — on time — before you can qualify for another personal loan with the same lender.

But getting approved for a second loan is often more difficult than the first. That's because lenders take a hard look at your monthly cash flow and debt-to-income ratio (DTI) when you apply. Having a loan with a high balance can also also lower your credit score. This makes it harder to qualify for a low interest rate and origination fee.

Beware of overborrowing

You might want to rethink that loan for another reason: Overborrowing. Borrowing more than you need will increase your monthly payments and the overall cost of your loan, making it more difficult for you to pay off your debts. It can also spark a cycle of debt if you become dependent on loans as a source of capital.

Avoid overborrowing by calculating exactly how much you need before applying for a personal loan and only applying for that amount.

Compare 5 lenders that offer multiple loans at once

Each lender has its own requirements for taking out a second loan before you’ve paid off the first. Here are the second loan policies of six top online lenders:

SoFi

Yes

$100,000
  • Three consecutive repayments on first loan
  • Not a resident of Michigan

Prosper

Yes

$40,000
  • At least 9 months of repayments
  • Current on loan repayments
  • 640 credit score or higher
  • No late payments within the last 60 days
  • No payments over 15 days late in the last year
  • No more than two returned payments the last three years

LendingClub

Yes

$40,000
  • Invitation from LendingClub
  • At least 30 days since loan was funded

Upstart

Yes

$50,000
  • Six consecutive months of on-time payments
  • Up to $50,000 of outstanding principal on first loan
  • Wait 60 days if any of the six most recent payments were late
  • Wait 60 days if you or you paid off the first loan within first six months

Laurel Road

Yes

$45,000
  • Current on first loan
  • Meets same requirements for first loan

How many personal loans can you have at a time?

That depends on your lender — or lenders — and your income. Most personal loan providers won’t lend to you if your DTI ratio is 43% or higher. This means that your monthly loan payments, bills and other costs can’t be worth more than 43% of your income before taxes.

5 reasons to wait before borrowing again

  1. You probably won’t get the best deal. If you’ve recently taken out a loan, your credit score will have taken a hit after getting a hard credit check, which can make you appear like more of a risk.
  2. You’ll have a higher DTI. Like low credit scores, borrowers with higher DTIs are considered risky and may have trouble being approved for another type of loan or credit card with a competitive interest rate.
  3. You might have trouble borrowing in the future. Taking on debt can be good for your credit if done in moderation. But it doesn’t look good when you apply for a loan and have too many inquiries on your credit report.
  4. It might not be the financial help you need. Regularly taking out personal loans to cover everyday expenses could be an indicator that you’re stuck in a debt cycle. In this situation, you might benefit from other financial services like debt relief.
  5. How much you owe each month will increase. Multiple loans means multiple monthly payments. While lenders generally won’t approve you for a loan that you can’t afford, if your financial situation changes, it could be more difficult to make these payments than if you took out a larger loan with a longer term.

Can I apply for multiple loans at the same time?

You can, but it’s not always wise. Applying for multiple loans at the same time could hurt your credit score, since each completed application typically involves a hard credit check. If you can’t qualify for the full amount you want to borrow from one lender, that could be a sign that you can’t afford to borrow that much.

Prequalify to compare rates

If you’re just interested in comparing rates, many lenders allow you to fill out a prequalification or preapproval application to get an idea of what kind of loan you might get if you continue. These typically use a soft credit pull, which has no impact on your credit. Taking further steps often involves a hard credit check, which can temporarily lower your credit score.

Still want to apply for multiple loans? Rate shop

Rate shopping is when you apply for multiple loans over a short period of time. If you’re applying for roughly the same amount of money with similar lenders, credit bureaus often recognize that you’re trying to find the best rate, not actually attempting to take out multiple loans.

In this case, credit reporting agencies count all hard inquiries from lenders within a certain period — usually between 14 and 45 days — as one. The inquiry also won’t appear on your credit report immediately, allowing you to look for multiple loans with your original credit profile.

Compare top online personal loan providers

Get a list of personalized options by selecting your credit score range and state of residence.

Data updated regularly
Name Product Filter Values APR Min. Credit Score Max. Loan Amount
Best Egg personal loans
5.99% to 29.99%
600
$50,000
A prime online lending platform with multiple repayment methods.
SoFi personal loans
5.99% to 18.85%
680
$100,000
A highly-rated lender with competitive rates, high loan amounts and no fees.
PenFed Credit Union personal loans
6.49% to 17.99%
650
$35,000
With over 80 years of lending experience, this credit union offers personal loans for a variety of expenses.
Credible personal loans
2.49% to 35.99%
Fair to excellent credit
$100,000
Get personalized rates in minutes and then choose an offer from a selection of top online lenders.
Upgrade personal loans
6.94% to 35.97%
600
$50,000
Affordable loans with two simple repayment terms and no prepayment penalties.
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Compare up to 4 providers

4 tips to get a personal loan application approved

You’ve decided it makes financial sense to get a second loan. Here are four steps you can take to increase your chances of approval:

  1. Check your credit report first. There’s a chance that your credit report contains mistakes that could hurt your credit score. If you notice anything off, contact the financial institution involved and the credit bureau to have it fixed before you apply for a personal loan.
  2. Make your repayments on time. Your payment history accounts for 35% of your credit score. Making all of your payments can increase your credit rating, while missing some payments can cause it to dive.
  3. Pay off as much debt as you can. The less debt you have, the more attractive you are to lenders. Try waiting as long as you can before taking out a second loan to lower your DTI and up your chances of approval and competitive rates.
  4. Know how much you can afford. You aren’t likely to be approved for a loan with monthly payments that you might not be able to afford. Having an idea of how much you can pay and how much your loan will cost can help you find the right loan for your personal financial situation.

Got an ongoing project? Consider a line of credit

When you’re not sure how much you’re going to end up needing to borrow, a line of credit might make more sense than applying for a personal loan. Lines of credit have the flexibility of a credit card — you can withdraw however much you need — but they typically come with higher credit limits and lower rates, similar to a personal loan.

Some are revolving and come with minimum monthly payments like you’d get with a credit card. Others come with fixed terms, typically one to five years.

Is a personal line of credit right for you?

Bottom line

It’s possible to take out more than one loan at once, but it could damage your credit and increase your debt-to-income ratio, making it more difficult for you to qualify for competitive rates in the future. Overborrowing can also lead to unaffordable monthly payments and a cycle of debt.

This doesn’t mean a second loan is always a terrible idea. If you find yourself needing more funds than you originally anticipated, you can afford to take on more debt and you’ve paid off some of your original loan already, a second loan could help. Use our personal loans guide as a starting point to find and compare lenders.

Frequently asked questions

Answers to more questions about taking out another loan.

Can I increase my loan amount?

Possibly. Some lenders allow you to increase the amount on a loan you’ve already taken out, though many don’t. Your lender might treat this request like another loan application and your interest rate could change after you apply.

Can I take out two personal loans at a time from different banks?

Generally, banks don't allow you to accept two personal loans from multiple lenders. Even if you qualify at first, both loans will show up on your credit report, which banks monitor. Depending on the bank's policy you may be asked to return the funds. You may be able to find out what happens if you take out two loans at once by reading the loan contract.

How many years can I take out a personal loan for?

Most lenders offer personal loans with terms ranging from one to five years, though it depends. You can find loans with terms as long as 25 years, though a longer term can result in more interest paid over time.

Is it cheaper to pay off a loan early?

It can be if your lender doesn’t charge prepayment fees. Reach out to your lender’s customer service line to make sure you understand the terms before making early payments on a loan.

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