Guide to Getting Second Personal Loans

Posted by in Loans | Updated on November 15, 2022
At a Glance: A second personal loan is a viable option if you can qualify. Your income must be more than the payments you have to make on your debt. Lenders will check your credit report and verify before disbursing a second loan.

Disclosure: Stilt is a lending company. Nonetheless, we are committed to recommending the best loan products to our readers when their needs are outside Stilt’s loan offerings.

Personal loans are a versatile tool. They can help you finance a large project or purchase you can’t or don’t want to pay for upfront.

If you already have a personal loan, however, you may be wondering if you can get another. Is it possible to get a second personal loan? Do lenders allow it? If so, which lenders should you consider for a second loan?

The short answer is, yes, it’s possible to get a second personal loan if you meet the eligibility requirements. There are some things you should consider before taking out another personal loan, though.

This guide goes over everything you need to know about taking out a second personal loan, including who is eligible, the best lenders, and how to decide if it makes financial sense for you.

Can I Take Out a Second Personal Loan if I Already Have One?

The short answer is, yes. You can most certainly take out a second personal loan but there are a few conditions that need to be met before it becomes reality.

You still need to qualify for the second personal loan before a lender will disburse it into your bank account. All the same eligibility criteria still apply.

The lenders will typically check your credit report, verify your income, and confirm your employment. They may also need to confirm your immigration status by checking and confirming your visas or residency status.

A second personal loan is a viable option if you can qualify. Most importantly, it’s a good idea if your debt-to-income ratio can withhold another loan. Your income must be more than the payments you have to make on your debt. This is one of the key ways in which lenders stop people from becoming over-indebted.

Dangers of Taking Out a Second Personal Loan

A second personal loan sounds like a great idea. But is it really worth it when you consider the monthly installments?

You already have a personal loan and you’re already locked in on monthly installments. A second loan could push you into a negative cash flow situation if you don’t manage it correctly.

Consider the project or purchase you want to finance with your second personal loan. Is it worth going into more debt? Is the project or purchase something you really need?

If you do need the thing you want the loan for, you should also figure out if there are cheaper borrowing options such as a home equity loan/HELOC or a 0% APR credit card that you can pay off during the intro period.

Borrowing more than you can afford can wreak financial havoc. Your credit score will also take a dive if you start missing loan installments which will make it much more difficult (or, at the very least, more expensive) to borrow in the future. You can also get trapped in a debt cycle where the interest charged is more than you can manage to pay off.

That being said, let’s assume you have checked your finances and you can take a second personal loan. Where do you start your search for lenders? Which banks offer personal loans for those who already have one?

Best Lenders for a Second Personal Loan

Here are some lenders we recommend for taking out another personal loan as well as who each is the best for and how to qualify:

Considerations to Make Before Taking a Second Loan

As mentioned earlier you must be absolutely sure about a second personal loan before you commit to such a responsibility. Here are two concepts you must understand which can help you decide whether a second loan is a good idea.

The Cycle of Debt

When not managed properly, debt can lead to something called a debt cycle.

Borrowers are strapped for cash so they take out a loan or use a credit card to afford expenses, then eventually need to take on more debt to pay off the original debt.

Here is a simplified overview of a debt cycle:

  1. Consumers need money.
  2. They get credit to afford expenses (credit card, personal loan, etc.).
  3. The lender requires payments to be made.
  4. Borrowers can’t afford payments so they take out more loans or credit card debt.
  5. The cycle repeats.

There’s nothing wrong with taking out loans. You just need to make sure you can afford repayment without having to go into more debt.

Remember a second loan also demands interest and monthly payments just like your first loan. This means your total required monthly payment will increase and more interest will accrue each month since you have two loans instead of one.

Check your debt-to-income ratio (your total debt divided by your total income) and make sure you’ll have enough of your monthly income remaining after your debt payments to afford essential expenses. You generally want to keep your debt-to-income ratio under 30%.

You must have enough to cover your housing and living expenses or else a second loan may be a bad idea.

Impact on Credit Score

If you can’t escape the debt cycle, you’ll inevitably end up over-indebted. You need more money and take more loans to cover the gap in your finances.

In the short term, this may seem like a sensible idea, but when your money depletes, you again face a shortage of cash. This shortage causes you to miss payments which has a negative impact on your credit score.

The businesses you owe money to report the missed payments to the credit bureaus. If you miss too many payments, you’ll damage your credit score quite badly.

This again has a bad effect on your debt cycle, because if you apply for any debt consolidation loans, you’ll get really bad interest rates compared to what you would have gotten if your credit scores were better (had you not missed any payments).

Does It Make Sense for Me to Have More than One Personal Loan?

Well, it depends on whether you can afford repayment and if you really need the thing you want to purchase or finance with the borrowed money.

The rule of thumb with any type of debt is to only take out what you can afford to repay according to the loan terms. If you can’t afford the monthly payments that come with the loan, don’t take it out.

In addition, you should only take out loans for things that are necessary. For example, maybe taking out a second personal loan to pay for a vacation isn’t the best idea. If you need to make car repairs to get to work, on the other hand, another loan may be a worthwhile investment.

How Many Loans Can You Have at Once?

There is no hard limit to how many loans you can have at once.

As mentioned previously, lenders typically like to see a debt-to-income (DTI) ratio under 30% or so. This means that you will need to demonstrate consistent income and not have too heavy of a debt load.

For example, a lender is much more likely to give you another personal loan if your income is $6,000 a month and your total monthly debt payments would be just $1,000 (DTI ratio of 16.67%) than if your total monthly debt payments would be $3,000 (DTI ratio of 50%).

So, yes, you can take out a loan if you already have one. You may even be able to take out additional loans if you have multiple already.

It’s not uncommon for people to have a personal loan, auto loan, mortgage, and even student loans at the same time.

Can You Get Two Loans from the Same Bank?

Each bank and lender has its own policies around if you can get out a second loan from it or not.

With that being said, most allow you to take out a second loan as long as you meet certain eligibility requirements.

Aside from credit score and debt-to-income ratio requirements, some banks may also require that you haven’t missed any payments on your first loan for a certain amount of time or that your first loan balance is under a certain amount.

Can You Take Out Two Loans from Different Places?

It is possible to take out two loans from different places if you meet the eligibility requirements—mainly credit score and debt-to-income ratio.

When lenders decide if you are eligible for a loan from them, they will consider your other loans which have an impact on your debt-to-income ratio. If they think you will be able to afford repayment on your new loan in addition to current loans, you are likely to be approved.

3 Simple Steps to Applying for a Second Personal Loan

If you are considering applying for a second personal loan and you’ve made on-time payments for half of your existing loan term, just follow these 3 simple steps.

Apply

Apply online for the loan amount you need. Submit the required documentation and provide your best possible loan application. Stronger applications get better loan offers.

Accept

If your application meets the eligibility criteria, the lender will contact you with regard to your application. Provide any additional information if required. Soon you’ll have your loan offer. Some lenders send a promissory note with your loan offer. Sign and return that note if you wish to accept the loan offer.

Repay

The loan then gets disbursed into your U.S. bank account within a reasonable number of days (some lenders will be as quick as 2-3 business days). Now you need to set up your repayment method. You can choose an autopay method online to help you pay on time every month.

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Bottom Line on Second Personal Loans

Personal loans are wonderful financial tools. They can help you finance all kinds of projects and purchases. But you should only take one out if you know you can afford it.

Think about your financial situation. Can you handle payments on multiple loans? Is your income stable enough to manage repayment for the entire term? Or do you have enough savings to afford your loans if you lost your source of income?

If so, you can consider a second personal loan.

Are you still looking for a second personal loan? You could be eligible for one. Read through the tips and the eligibility criteria supplied above and apply today.


Need a Loan? Get One in 3 Simple Steps

If you are considering applying for a personal loan, just follow these 3 simple steps.

Apply

Apply online for the loan amount you need. Submit the required documentation and provide your best possible application. Stronger applications get better loan offers.

Accept

If your application meets the eligibility criteria, the lender will contact you with regard to your application. Provide any additional information if required. Soon you’ll have your loan offer. Some lenders send a promissory note with your loan offer. Sign and return that note if you wish to accept the loan offer.

Repay

The loan then gets disbursed into your U.S. bank account within a reasonable number of days (some lenders will be as quick as 2-3 business days). Now you need to set up your repayment method. You can choose an autopay method online to help you pay on time every month.

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About Stilt

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We take a holistic underwriting approach to determine your interest rates and make sure you get the lowest rate possible. 

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