How Many Payday Loans Can You Have At Once & Does It Matter?

How many payday loans can you have at one time?

When you are in a difficult financial situation, you might be in a position where you want to take out more than one payday loan. Perhaps you took out one loan, and something else has cropped up before payday, and you now need further cash. Or maybe you under-estimated the amount of money you needed to cover the gap until your next paycheck? Whatever your reason, taking out multiple payday loans might not be the best solution.

The payday loans market has changed greatly in recent years, thanks to new rules and regulations introduced. Payday loan lenders are required to make sure they are lending responsibly, and this often means not setting up new payday loans to those with existing debt. In 2014, one woman managed to get approved for eight different payday loans at one time and racked up over £3,000 of debt because of it. Since then, payday loan lenders have to follow stricter regulations.

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What are payday loans used for?

Thousands of people in the UK struggle to make their funds last until their next payday and turn to payday loans to help bridge the gap. Payday loans offer a quick and easy solution when a cash emergency arises. They give you access to funds quickly, with many lenders offering same-day payouts.

Can I take out multiple payday loans?

The new laws surrounding payday loans should mean borrowers can’t take multiple loans, but sometimes, applications can slip through the net and get approved anyway. Borrowers can often take out numerous payday loans despite the laws, as sometimes credit and background checks won’t show the outstanding debt, especially if loans are applied for in quick succession.

Just because you might be able to deceive lenders into giving you more than one payday loan at a time doesn’t mean you should. If you can’t get enough cash from a single payday loan or have many unexpected expenses, then other kinds of finance might be better suited to your needs. This guide explains how multiple payday loans can lead to trouble and what you can do instead of taking another loan.

Your questions, answered

No matter your reason for wanting more than one payday loan, it is never a good idea. Multiple payday loans can lead to serious financial difficulties and result in a spiral of debt that is almost impossible to break free from. Here are just some of the reasons you should not take out more than one payday loan:

 

Multiple payday loans are hard to manage

Keeping track of numerous different debts can be a struggle. It is easy to fall into further difficult times if you find yourself with various sources of credit to manage. There is a very fine line between affordable and unaffordable. Taking out more than one payday loan can quickly tip you over the edge into unmanageable debt. Not only that but keeping on top of multiple different repayment dates isn’t easy. You may forget when one of your multiple payday loans is taking funds from your account and leave yourself short for other daily essentials.

 

They are supposed to be a short term fix

Payday loans are created as a short-term finance option instead of a long-term solution. If you are in a position where you need more than one payday loan at any one time, this isn’t the best product for your needs. Payday loans are great if your requirements are a small amount of cash quickly, but as soon as you find yourself needing to borrow more, a payday loan isn’t the right choice. These short-term loans have not been created as a source of multiple lines of credit or for long-term lending, so don’t use them in this way.

 

Payday loans have high-interest rates

The more you borrow using payday loans, the more interest you will be paying. These types of finance are notorious for their high-interest rates and additional fees. If you take out one payday loan, you will be paying some interest, but your interest is increasing even further if you take out another. The interest rates on payday loans are high because they are designed to be a quick fix for a small amount of money but as soon as you start using them regularly or taking multiple loans, you will be paying exorbitant rates. Finding an alternative finance solution will always be a cheaper option.

 

Multiple loans will impact your credit rating

Every time you take out a payday loan or even just make an application, it could be marked on your credit history. When you are getting multiple payday loans, your credit score is going to take a hit. This can make getting approved for future finance a struggle because it demonstrates to lenders that you rely on payday loans to get by. If you have more than one payday loan at any one time, this will be even more of a red flag to future lenders.

 

You can get stuck in a debt cycle

You should only take out a payday loan if you are confident you can make the repayments when your salary comes in. If you then need to take another loan, it is unlikely you will pay everything off in one go. For many borrowers, this results in them having to take out more payday loans the next month, and so on. You can quickly find yourself in a vicious cycle of borrowing, which can be almost impossible to get out of.

If you already have a payday loan out and find yourself in need of more cash, you can consider some other solutions. Hopefully, you now understand the implications of taking out multiple payday loans at one time and know that this is not a viable option. Some alternatives to a second payday loan are:

 

Consider your need for funds

Think very carefully about what you need the cash for and if it is an urgent essential. If you need the money for something that can wait until you have more funds available, it is always better to delay your purchase instead of taking on more debt. If you have already had to take out a payday loan that hasn’t been paid back yet, consider if your spending is a necessity or a nicety.

 

Seek debt advice

If you need additional cash to cover essentials, such as your mortgage, rent, bills or food, you should seek advice from a debt advisor. Debt advisors offer free, confidential help to those in financial trouble and can offer guidance on the best options for your unique situation.

 

Use a credit card

A credit card is a more affordable and sensible way of borrowing multiple amounts of money in one month. They usually have lower interest rates than payday loans and offer flexible repayment options. If you already have a credit card, consider using this for your current expenses instead of a payday loan. If you do not have a credit card, you can apply for one to help you out in the future.

 

Get an overdraft

Most banks will offer interest-free overdrafts up to a certain amount. Ask your bank about your overdraft options, as this might be a much easier and cheaper way to borrow money. Be careful to not end up in an unauthorised overdraft, as these come with expensive charges and can be challenging to get out of.

 

Take out a short-term loan

Payday loans are not the only type of short-term finance available. A short-term loan can allow you to borrow a small amount of money for three months and longer. Instead of paying back the total amount in one go when you get paid, you can make your repayments in monthly instalments. This makes them a much more manageable option which can prevent you from ending up in a spiral of debt.

At The Money Shop, we are experts in short-term finance and finding speedy loans when you need them most. We can help you understand the finance options available to you and talk you through the alternatives to payday loans. Get in touch with us today to find out how we can help.