How Many Payday Loans Are You Allowed To Have Open?

There is no legal limit on the number of payday loans that you are allowed to have open at any time in the UK. However, strict regulation by the FCA and a commitment by lenders to responsible lending practices means that it is unlikely that you will be allowed to have more than one or two payday loan open at any time.

The risk for lenders is that taking on too many payday loans or too much credit could make it harder to manage – and put the customer into arrears or financial difficulty. The role of the lender during the application process is to find the right amount that the customer has requested and what they can afford to repay.

By offering too many loans could overstretch the customer and put them into a spiral of debt that they cannot get out of.

Understanding The History

Before the introduction of regulation by the Financial Conduct Authority (FCA) in 2015, there were much looser laws in terms of the amount you could borrow through payday loans and how many loans you take out.

You would often hear in the news of horror stories of people taking out 8,9 or 10 payday loans at once and later falling into major debt or bankruptcy. 

With new regulation, payday lenders have to be a lot more cautious and carry out thorough credit and affordability checks to determine the eligibility of a customer, the amount they can borrow and how long for.

Why Might You Need Multiple Loans At Once?

• Emergency expense
• Loss of income
• Medical bills
• Car repairs
• Urgent household repairs
• Funeral expenses
• Helping out a relative financially

Why Can I Not Have Several Payday Loans Open?

By having multiple payday loans open, you could potentially overstretch yourself and struggle to stay on top of payments.

When a lender approves you for a payday loan, they are carefully looking at your income and other expenses to find just the right amount you can borrow and afford to repay.

Payday loans are designed for emergencies and they carry higher interest rates than typical loans and credit cards. Taking on too much debt could be hard to manage if you have any financial shortfalls, further emergencies or loss of income.

Can Lenders See How Many Payday Loans That I Have Open?

Yes, a lender can see how many other loans, credit cards and outstanding debts that you have open. When carrying out a credit check during the application and underwriting process, a lender will be able to see all existing and previous debts on your credit report. 

Therefore, if a lender see one or several payday loans already open, they will look at the amount and repayment dates, but they might be more cautious to avoid giving you too many loans.

Can I Get More Than One Payday Loan From The Same Lender?

No, you are usually restricted to just one payday loan from one lender. You cannot take out multiple loans with the same lender. You may be able to increase the amount that you have borrowed or be able to top this up based on your credit score, income and affordability.

The One Stop Money Shop offers instalment loans from £400 to £2500 – and you may be able to borrow more than the minimum of £400 depending on your income and affordability and by spreading payment over time.

What Can I Do If I Need To Borrow More Money?

When applying for a loan, you may not get the full amount that you requested. If you were looking to borrow £1,000 and only received £500, you may look to top this up elsewhere.

Rather than take out additional loans, there are other options that can be fast and affordable too. 

Borrowing from family and friends – In emergencies, asking a close friend or family member to help you borrow a little more can be a fast and effective way to access cash. It is always important to set clear expectations and boundaries in terms of repayment, otherwise this can lead to conflict and an uncomfortable situation.

Credit cards – If you need a loan to make an important purchase, such as for a new house or to pay another company for a service, using a credit card can be an option. Especially if you can access a credit card with a 0% introductory period for 12-24 months. This means that you do not pay any interest on the card during this time – and later you can move the debt over with a balance transfer card.

Credit unions – Credit unions are non-profit organisations that are set up in local communities. It is possible to borrow similar amounts to payday loans such as £300 and £500. The only thing to note is that they can take a few weeks to be approved and funded.

Selling items you do not need – Our homes are full of items that we do not need in terms of clothes, gym equipment, books, music and furniture. Selling these items online, social media or car boot sales can help you supplement your income if need be.