Can you have two payday loans at once? How many payday loans are too many?
If these questions are ringing through your mind, you’re probably in some kind of financial pressure. There’s no shame in that, though. Even before the COVID-19 people ravaged the economy, the vast majority of workers in the United States were living paycheck to paycheck.
When you need money in a matter of hours, perhaps because you’re in a financial emergency, a payday loan will help. These loans are typically approved and disbursed quickly, as long as you can provide proof of employment.
Can You Have Two Payday Loans at Once?
The short answer is yes, but it’s not that simple.
It depends on a couple of factors, as fleshed out below:
The average American has at least two loans. You could have an auto loan, a student loan, and even a mortgage at the same time.
The biggest factor will be your income.
As long as you have enough income left after deductions, there can always be room for another loan.
For instance, let’s say your income (after tax) is $3,000.
Then, you have the following loans:
- Mortgage — $700
- Car loan — $300
- Payday loan — $500
Add this up, we have $1,500. So, you have a similar amount left after paying your loans. If you want to go in for a payday loan, you’ll certainly get approved, because your paycheck has sufficient “wiggle room.”
On the other hand, if your paycheck is too squeezed, your application for any other loan, not just a payday loan, will be denied. This is one of the reasons lenders ask for your pay stubs during the loan application process. They want to see whether you have enough money left after you have paid your other loans.
Consumer Protection Laws
Payday loans have a bad reputation and for good reason. With interest rates as high as 400 percent, these loans are exploitative, no doubt.
Many people who take out payday loans end up a debt cycle that’s hard to break. As a result, there are now laws in place to protect the consumer from predatory lending practices.
As such, if you already have a payday loan, it’s possible that a lender can deny you a second loan, even if your paycheck allows.
From credit score checks to payment options, payday loan lenders have different policies. Some have no problem lending to you when you already have an active payday loan, as long as you meet their requirements. Others, as a matter of policy, will reject your application.
So, if you want more than one payday loan, you might want to research around and find a lender that allows the practice.
Be Smart with Payday Loans
Can you have two payday loans at once? It’s possible, as long as consumer protection laws and your paycheck allow. But is it something you want to do? Before taking out a payday loan, ensure you’ve exhausted all other options.
Keep reading our blog for more tips and insights.