One of the most common questions that people who already have a payday loan ask is whether it’s allowed to have more than one. The fact of the matter is that the answer isn’t particularly cut and dried. It can be a bit muddy and unclear.
Still, there are three major areas you need to look at if you’re considering taking out more than one payday loan:
Legal Issues
First of all, you need to consider the regulations that may exist in your state. Typically, there aren’t laws that restrict your ability to take out a loan. Instead, those laws have more to do with payday lenders. Some states may have caps on the amount that payday lenders can loan as well as a limit on the number of loans.
There usually aren’t laws that prevent you from getting a payday loan from one lender and then going to another payday lender for another loan. Now, we’re not suggesting for one moment that this is a good idea (it’s not, usually). We’re just suggesting that it isn’t a legal issue.
Lender Issues
The next area to consider is the lender’s policies. Some payday lenders will ask you if you already have a payday loan with another vendor. If you say that you do, they won’t loan to you. Not all lenders operate this way, but many do.
You don’t want to misrepresent your situation to the payday lender. If you do and if you wind up not making your payday loan payments, the lender can use the fact that you weren’t honest on your application in a civil suit against you.
Personal Issues
The real question is whether or not it’s a good idea to take a second (or third or fourth) payday loan. The fact is that payday loans come with severely high interest rates, and having more than one prolongs the time that it will take you to pay them off. You don’t want to run the risk of getting caught in the payday loan trap where you can’t pay off your loans and wind up getting more and more into debt.