Short-term loans, commonly referred to as payday loans, can be a convenient option when you’re strapped for cash before your next payday. If you already have a short-term loan and you need another one, there are a few things you need to know before you apply.
Is it possible to take out multiple short-term loans?
It could be, though it depends on the lender and your state of residence.
If it’s legal in your state, you often need to meet more tough criteria than when you applied for your first loan because a second short-term loan is more of a risk for the lender and a greater financial burden to the borrower. Consider payday loan alternatives for more affordable options before taking out more debt that could put you in a cycle of late payments.
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What will lenders look at when I apply for a second short-term loan?
Lenders will want to ensure you will be able to repay the loan. To do this, they will review your current financial situation and look at multiple factors, which can include your credit history, what payments you make on your current loan, your current employment and your income.
If you already have a lot of debt obligations or you lost your job after you took out your first short-term loan, you could have trouble qualifying.
How can I make sure I’m approved for a second short-term loan?
There’s no way to guarantee if you’ll be approved. If you’re looking to take out a second loan keep the following in mind:
- Reexamine the eligibility criteria. You may or may not be eligible for loans you were once eligible for. Some lenders may specify that you can’t currently be repaying a short-term loan and that you can’t use a second loan to pay for the first.
- Check your budget. Can you afford the repayments of the loan you are applying for? If you think you will struggle to make multiple loan payments, then you should consider alternative financing options, such as financial assistance programs.
- Be aware of rollover fees. If you choose to refinance your first short-term loan into a second loan with the same lender, you’ll still owe the original amount you borrowed and the fixed fee, plus the fees for the subsequent loan.
The bottom line
Compare your options before applying and always check the eligibility criteria to make sure you’re qualify. There’s a range of payday loans available, so you have a better chance than ever before of finding the right loan for you.
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