Can you have more than one personal loan?
Yes, you can have more than one personal loan at the same time. There is no rule that prevents you from holding more than one active loan. However, the simple permission to have multiple loans doesn’t guarantee approval.
When you apply for an additional loan, lenders will evaluate your new application just as they did for your first one. The evaluation typically includes reviewing your credit score, income and existing debt.
Multiple loans with the same lender
Some lenders set their own restrictions on the number of loans they will issue to a single borrower. Individual lenders may also limit the total dollar amount you can borrow across all your loans with them.
For example, a lender might have a policy stating that a borrower can’t have more than 2 active loans at once, or that the total combined balance of all loans cannot exceed $20,000. If you’ve already borrowed $10,000, you may only be approved for an additional $10,000 from that lender, regardless of your credit history.
You may also encounter some lenders that require a specific waiting period between loan applications. If you recently took out a personal loan, you might need to wait several months before applying for another with the same lender.
Multiple loans with different lenders
You might also consider applying for a second loan with a different lender. You are allowed to have personal loans with different lenders simultaneously.
However, a new lender will check your credit score. They will look at any existing loan you have and factor that debt into their decision. If your debt-to-income ratio (DTI) is already high from your first loan, a new lender may view you as a higher-risk borrower, which could result in a higher interest rate or denial of the second loan.
Qualifying for additional personal loans
Getting approved for a second personal loan can be more challenging than getting the first. Lenders want to be sure you can handle the additional monthly payment on top of your current obligations. Here are a few key factors that may impact your approval odds.
Debt-to-income ratio (DTI)
DTI compares your total monthly debt payments, such as mortgage payments and car loans, to your gross monthly income, expressed as a percentage. When you already have a personal loan, your DTI is higher than it was before. Higher debt may be a sign that you don’t have enough remaining income to cover the new payments, which may concern lenders.
Credit score
Lenders can look at your payment history on an existing loan to see if you’ve been making payments on time. A strong history of on-time payments can demonstrate responsibility and help to improve your chances of approval. On the other hand, if you’ve missed payments or carry high credit card balances, lenders may consider a new loan a financial strain.
Borrowing limits
As mentioned earlier, lenders often have internal limits on how much they are willing to lend to a single borrower. Even if you have a strong credit score and a low DTI, a lender may not approve a second loan if it exceeds their maximum limit for a single borrower.
How can having multiple personal loans affect your credit score?
Taking on additional debt often affects your financial profile. Here’s how juggling multiple personal loans can affect your credit score.
- Credit inquiries: When you apply for a loan, the lender performs a hard inquiry on your credit report. A hard inquiry can potentially cause a small, temporary dip in your credit score.
- Payment history: Managing multiple loans requires tracking multiple due dates and monthly payments. Successfully managing these payments can help you build a positive payment history, but you may be more likely to miss a payment, which may negatively affect your payment history.
- Increased debt load: Taking out another loan will increase your DTI. Your DTI may not directly affect your credit score, but it’s a factor that lenders may consider when approving you for a loan.
Is it a good idea to have multiple personal loans?
Whether it’s a good idea to take out multiple personal loans depends on your borrowing needs and your ability to repay them. It’s important to weigh the pros and cons based on your financial situation.
Pros of multiple personal loans
- Access to more funds: If you have a specific need, such as an unexpected expense, a second loan can provide the cash to cover it.
- Debt consolidation: Sometimes taking out a second, larger loan to pay off the first (and other debts) can simplify your finances. If you can qualify for a lower interest rate on the new loan, a personal loan for debt consolidation may make sense.
- Fixed repayment terms: Unlike revolving credit, which may have variable minimum payments, personal loans have fixed monthly payments and a set payoff date. This predictability can help to make budgeting easier for some borrowers.
Cons of multiple personal loans
- Strain on monthly budget: Adding another monthly payment reduces your disposable income. If your budget is already tight, a second loan can make it difficult to save for emergencies or other goals.
- Potential for higher rates: If your DTI has increased or your credit score has changed since your first loan, you might not qualify for the same favorable terms. You could end up with a higher interest rate on the second loan.
Understanding these risks of getting another personal loan, you may consider alternative options.
Alternatives to personal loans
If you’re hesitant about taking out another personal loan or run into trouble qualifying for one, there are other financial tools available depending on your needs.
Home equity line of credit (HELOC)
If you own a home, you might consider a HELOC. A HELOC lets you borrow against the equity of your home. This funding option works like a credit card, with a credit limit and the ability to borrow as needed. The main difference is that your home is used as collateral.
Credit card
Using a credit card might be more convenient for covering smaller expenses. Some credit cards offer introductory periods with low promotional APRs on purchases or balance transfers. Just be mindful that when promotional periods end, the standard interest rate will apply.
Citi® Flex Loans
For eligible Citi credit cardmembers, a Citi® Flex Loan offers a unique borrowing option. It allows you to convert a portion of your credit card’s unused credit line into a fixed-rate loan, which you can repay over a set period with fixed monthly payments. Since you’ll be leveraging your existing credit line, you don’t need to submit a new application for approval.
Savings or an emergency fund
Another option is to pay for an expense with your own savings. While you may not want to use your emergency fund, it can be a solution if you can’t qualify for a second personal loan.
Explore another personal loan with Citi
Whether you're looking to consolidate debt or cover a surprise expense, understanding your borrowing options is the first step.
Citi offers personal loans to both existing and new Citi customers who meet specific eligibility criteria, including an established credit and income history, as well as additional factors. Citi offers personal loans of up to $30,000 for new-to-Citi customers and up to $50,000 for eligible Citi credit cards or Citi checking or savings account customers.
Citi customers with a Citi checking or savings account may be eligible to apply for a second personal loan.
If you think a second personal loan could help you reach your goals, apply online today to explore available options.
This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
