If you have a personal loan and are thinking about taking out another, you may be wondering whether you’re allowed to have more than one personal loan. While there’s no rule that says you can’t have multiple personal loans, whether you can have multiple loans with the same lender and the maximum dollar amount depends on the lender’s policies. Having existing debt may also affect your ability to qualify for additional loans and the loan terms you receive.
Let’s look at what factors impact whether you can take out more than one personal loan and some ways to decide whether this is the right financial move for you.
Can you have more than one personal loan?
Yes, you can technically have more than one personal loan. Some lenders limit the number of loans they will issue to each borrower. They may also limit the amount. For example, you may be able to borrow a maximum total amount of $20,000 from a particular lender. So, if you’ve already borrowed $10,000, you may be able to qualify for another loan of up to $10,000.
Your creditworthiness and debt-to-income ratio or DTI (your monthly debt payments expressed as a percentage of your gross monthly income) will factor into whether you’re approved for a loan. So, even if you technically can have more than one loan, you might not be approved.
Citi offers personal loans of up to $30,000 per borrower. Some Citi customers may qualify to open a second personal loan. Also, Citi offers Citi® Flex Loan to eligible Citi credit cardmembers, which allows the cardmember to choose an eligible loan amount leveraging the card’s available credit line, with a fixed interest rate for the duration of the loan.
Multiple loans with the same lender
If you already have a personal loan from a lender and are considering applying for a second loan with them, see if the lender has a policy on multiple loans. Lenders may have a limit on the number of loans issued to one borrower. They may also have a cap on the total borrowing limit (across multiple loans) they're willing to offer an individual.
Just because you can have more than one personal loan with a lender doesn’t mean you’ll be approved. However, the lender may be more likely to offer a second personal loan if your existing debt is in good standing – that means you’ve been making on-time, monthly payments in full.
Multiple loans with different lenders
You’re allowed to take out personal loans with different lenders, but you still need to qualify. The new lender will still evaluate your eligibility for a personal loan based on things like your creditworthiness and DTI.
Qualifying for additional personal loans
If you have an outstanding personal loan, it might be challenging to be approved for another. Here are a few factors that may impact your ability to get a second personal loan.
One big factor is your debt-to-income ratio (DTI). Your DTI lets lenders know what your monthly debt payments look like each month and can help them make an informed decision about whether you can manage more debt. Your DTI can include things like student loan payments, credit card payments, car loans and personal loans. Having an existing personal loan may mean that you have a higher DTI and are therefore seen as riskier to lenders.
If you have outstanding debt, you may be able to qualify for a second personal loan, but it may not be the amount you’re hoping for. A lender might approve you for a lower amount. This is also where lenders’ borrowing limits (the total amount you’re allowed to borrow) can come into play.
Having existing debt may also affect what kind of interest rate you qualify for. You may get the loan you want, but the rate may be higher than your current personal loan.
How can having multiple personal loans affect your credit?
There are a few ways – both direct and indirect – that getting a personal loan can affect your creditworthiness.
- Credit inquiries: Applying for a personal loan typically triggers a hard inquiry1. Hard inquiries don’t have a big impact, but they can affect your credit temporarily.
- Positive payment history: Making your loan payments in full and on time can contribute to building a positive payment history and help you build credit over time.
- Late or missed payments: Juggling multiple loans may mean a payment slips through the cracks or that you’re unable to make a payment. Late or missed payments can significantly impact your credit.
- Increased DTI: Borrowing more will increase your DTI. Your DTI does not directly affect your credit score, but it’s a factor that lenders may consider when approving you for credit cards or loans.
Is it a good idea to have multiple personal loans?
Whether or not it's a good idea to take out multiple personal loans depends on your borrowing needs and your ability to repay the loan.
An additional personal loan may be helpful if you need emergency funds. It can also be helpful if you want to consolidate higher-interest debt (such as credit card debt). If you have enough income to easily cover the monthly payments and qualify for an interest rate and repayment term that can save you money in the long run, getting an additional personal loan for debt consolidation may make sense.
However, a personal loan may not be a good idea if you're unable to keep up with your regular expenses or if you can't get a good interest rate. If this is the case, you may want to consider alternatives.
Citi offers personal loans to both existing Citi customers and new Citi customers that meet specific eligibility criteria, including an established credit and income history along with additional factors determined by Citi. If you think you could benefit from a Citi Personal Loan, apply online today.
