Can I have two personal loans at once?

You can hold multiple personal loans at the same time, or you could top-up or consolidate existing loans. Compare policies by lender.

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Can I take out two personal loans at the same time?

Yes, it’s perfectly possible to take out more than one loan, with either your current lender or a second lender. However, different lenders have different policies, and each application for credit will be assessed on its own merit.

Alternatively you have the option of going to a second lender to apply for another loan.

If you want to borrow more from your current lender, then there’s a good chance they’ll insist that you terminate your first loan (which could involve a fee or having to pay one-to-two months’ interest beyond the date when you close the loan) and take out a new, bigger loan instead.

For example, the AA does not add on additional funds to a loan, however if you wish to borrow more money you can settle your existing loan and reapply for a new one.

Ultimately, lenders want to lend, and the more money they lend, the more money they make in interest. Naturally they’ll want to take care not to expose themselves to undue risk (they want to be sure they’ll get their money back) and they also have a responsibility to ensure that they are lending responsibly.

Before running multiple loans concurrently, you should ask yourself if it’s the most sensible route to ultimately getting free of the debt. In some situations, a realistic debt consolidation plan or a getting advice for debt that’s become overwhelming could be a smarter choice.

What about applying for multiple loans at the same time?

If you’re attempting to increase the overall amount you can access today by applying to two separate lenders at the same time, you’re likely to hurt your credit record and put off prospective lenders. That’s because each application for credit involves a credit check, puts a very slight dent in your credit score and is visible to other lenders.

If you’re just interested in comparing rates, many lenders allow you to fill out a few basic details to get an idea of the likelihood that you’d get approved, and the size of loan and rate that might be available to you. These might use a “soft” credit search facility, which leaves no trail on your credit record. Better still, our eligibility checker lets you check your likelihood of approval with multiple lenders in one fell swoop, in minutes.

To access larger sums, you’ll generally need to secure the loan against property. Secured loans, also known as “homeowner loans”, can allow would-be borrowers to access larger sums and/or lower rates, but come with the obvious downside that you’re putting your house on the line.

3 things to consider before getting another loan

  1. You might make it harder to borrow in the future. Taking on debt can be good for your credit if done responsibly. But when you apply for a loan it doesn’t look good if you have too many inquiries on your credit report or are in a great deal of debt already.
  2. It might not be the financial help you need. Regularly taking out personal loans to cover personal 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. There’s a chance that taking out another personal loan might only dig you deeper into debt.
  3. How much you owe each month will increase. Multiple loans means multiple monthly repayments. 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 repayments than if you took out a new, larger loan with a longer term.

Beware of over-borrowing

Another reason you might want to rethink that second loan is over-borrowing. Borrowing more than you need may 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 over-borrowing by calculating exactly how much you need before applying for a personal loan and only applying for that amount. If there are too many unpredictable factors to come up with a solid number, you might prefer to consider a “line of credit” product, such as a credit card. This gives you continual access to a certain amount funds but only charges interest on the amount you borrow.

What about Debt consolidation?

If you’re considering taking out multiple loans, you may want to consider combining your debts into one easier-to-manage loan, which is known as consolidating debt. Although some financial products are specifically marketed for this purpose, almost any loan (or a credit card) could be used for this purpose.

Instead of taking out an additional loan to cover your new expenses, you can apply for a loan to cover both the new amount, as well as any outstanding amount you’re still paying off your other loan. This means you’ll avoid the issue of having to manage multiple repayments and debts.

When consolidating larger debts, some people opt for a secured loan. This is a big decision, because ultimately you’re putting your house on the line, but by reducing the risk to the lender, you could access a wider range of deals (i.e. larger loans, longer loans and/or lower interest rates) than you might get without offering security.

4 tips to get your next personal loan application approved

You’ve decided it makes financial sense to get a second loan. Here are four things you can do 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 chances of securing finance. If you notice anything amiss, contact the financial institution involved and the credit reference agency to have it fixed before you apply for a personal loan.
  2. Make your repayments on time. Your payment history plays a significant part in your credit score. Making all of your payments in a timely fashion is likely to increase your credit rating, while missing some can cause it to dive.
  3. Pay off as much debt as you can. Broadly speaking, 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 level of debt 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 repayments 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.

Bottom line

It’s possible to take out more than one loan at once, but proceed with caution. If you’re planning to take out a mortgage sometime soon, you won’t want to have multiple personal loans running, or a history of over-borrowing, when you come to apply. Over-borrowing can also lead to unaffordable repayments 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 be the way forward. Use our personal loans guide as a starting point to find and compare lenders.

Ultimately, each lender will have its own policy around additional borrowing for existing loan customers. For example:

  • Some lenders simply won’t allow multiple concurrent loans or “top-ups” to existing loans.
  • Some lenders insist that you terminate your first loan and take out a new, larger loan.
  • Some lenders allow you to take out a second loan after the first loan has been maintained successfully for a specified period.
  • Some lenders are perfectly happy for you to run multiple loans concurrently.

Alternatively, you always have the option of applying to a different lender. However, bear in mind that they will take into account that you already have a personal loan running with another lender. That could make you a higher risk, so you might find yourself getting rejected or else offered a rate higher than the advertised representative APR. Many applicants don’t realise that lenders are only obliged to award the representative APR to 51% of people who take out a loan. The other 49% could pay a higher rate of interest, depending on factors like credit score, risk profile and income/expenditure.

Consolidating the debt (which some lenders may insist on) could be another viable option, but perhaps you scored a fantastic rate on your first loan, and you don’t want to lose it, or perhaps you want to avoid being penalised for paying off your first loan early. A common early repayment policy among providers of personal loans is to charge two month’s additional interest on any amounts paid off early, so by moving the debt to a new loan, it’s theoretically possible to find yourself doubling up on interest.

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