Can I Take Out Multiple Payday Loans?

Yes, technically, you may be able to take out multiple payday loans or more than one loan, with different lenders, but this is not something that is recommended. The cost of borrowing is higher than typical financial products and many lenders will avoid lending to you if you already have one payday loan open.

Payday loans offer many Britons a type of emergency loan, offering an important cash injection of £300 or £500 when an unexpected expense or household emergency arises. 

For those months where Britons feel the pinch or have an important expense, they may be inclined to take out multiple payday loans of £200 or £300 from the same or multiple lenders. But the interest rates charged are higher than other typical loans and taking on too much debt could put borrowers into financial difficulty. 

The Financial Conduct Authority (FCA) introduced strict regulation to the payday loans industry in 2015 which limited the number of loans and debt that customers could take on. Prior to this, there was no limit on the number of payday loans a customer could take out, with some horror stories of people taking out 9 or 10 loans in a month.

Today, there are far more rules in place to protect customers. Payday lenders are required to act responsibly and ensure borrowers are not exposed to levels of debt that they cannot afford.

Why Shouldn’t I Take Out Multiple Payday Loans?

You should not take out multiple payday loans because they are an expensive form of borrowing and failing to repay can cause debt problems.

Payday loans carry much higher interest rates than other mainstream products. The average APR for payday loans ranges from 400% – 1,000% APR (with daily price caps at 0.8%) and this is far dearer than alternatives such as personal loans and credit cards that range from 8% to 36% APR.

The danger of taking on too many payday loans is that missing payment will incur late penalties, a negative impact to your credit score and interest will continue to accrue.

If another financial emergency arises or you lose your job, you are still liable to pay off any outstanding loans – and this could put you under severe financial pressure and risk you falling into a debt spiral.

Can I Take Out Multiple Payday Loans With The Same Lender?

No, you are limited to one payday loan with a lender and if you would like to borrow more from that lender, you can speak to them to explore different options. This may involve paying off your existing loan early and then reapplying for a larger amount. However, this will be subject to income, credit and affordability checks.

Can I Take Out Multiple Payday Loans But With Different Lenders?

Yes, technically, you can take out 2 or 3 loans from multiple lenders, however, many companies will not give you an additional loan if they know you have an existing payday loan open – and this information is available through credit checks and open banking.

Can a Lender Tell if I Have Other Loans Open?

Yes, lenders have access to information that shows any credit cards and loans that you currently have open and have recently closed. 

This information is available to lenders when running a credit check during the application process and also through open banking. Lenders will always check this information to avoid giving a borrower more finance or loans that might put them into greater financial difficulty. 

What Should I Do If I Need To Take Out Multiple Loans Or Need More Finance?

If you need to access more finance, rather than taking out multiple loans, you can look at other options including borrowing money from family and friends and speaking to a local credit union.

Credit unions are available to serve their local communities offering super low rates of interest and no penalties for late repayment. You will need to check the criteria of your local credit union to see if you are eligible.

If you need to borrow money, you might look at ways to reduce your current debt by removing any unnecessary costs. This may include car finance, monthly subscriptions, credit cards and store cards that you do not use often. Not only does paying off these financial products reduce your overall debt-to-loan ratio, but it also improves your credit score.