If I Owe a Payday Loan, Can I Get Another? Yes, But You Probably Shouldn't - Credit Summit (2023)

A common question anybody struggling with payday debt has asked is, “Can I get another payday loan if I already have one?”The short answer is that yes, you can usually get another payday loan. However, it will likely not be from the same lender, and the terms will be even worse than your original loan.

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A quick summary:

  • The law doesn’t prevent lenders from giving out multiple payday loans
  • Sometimes lenders won’t give out a second loan if you already have one
  • The more loans you get, the higher the interest rate. And the more likely you are to fall into the payday loan trap
  • There are several alternatives to additional payday loans, such as consolidation programs

Also Read: How to Consolidate Payday Loans into One

Table of Contents

The Data: Most Borrowers Have More Than One Payday Loan

According to data from DebtHammer, the average payday borrower has 2.8 loans on average. Below, you can see the percentage of borrowers by the number of loans they have.

If I Owe a Payday Loan, Can I Get Another? Yes, But You Probably Shouldn't - Credit Summit (1)

So the short answer is that yes, many people can get multiple payday loans.

Laws Don’t Prohibit Multiple Payday Loans

Payday loans — also called short-term loans, cash advances, and small personal loans — are regulated by state law.As of Jan. 1, 2023, payday lending is illegal in 18 states and the District of Columbia but legal in the other 32 states.

Also Read: Can You Get an Extension on a Payday Loan?

States With No Loan Limits

Some states have no loan limits.InTexas, for example, there is no legal limit to the amount a pay lender can give you. They could give you a loan for $100,000 if they wanted to (which obviously they wouldn’t).

So if you already have a $500 loan, the same lender or any other lender could give you another $500 loan.

StatesWithLoan Limits — You Can Still Get a Second Loan

In Virginia, for example, the maximum loan amount is $500. But thatdoes not meanyou can only borrow $500. All this means is that anyindividual lendercan only give you $500.

They can and will allow you to roll over your loan if you can’t pay at the due date. There may be additional fees associated with these.But they can’t increase your initial loan amount.

(Video) Cash Loans - The Real Dangers Of 'Fast Money' & How Payday Loans Are Predatory

If you have a $500 loan from Speedy Cash, there’s nothing prohibiting Ace Express from giving you another $500 loan.

So even in states that have a loan limit, you can get a second payday loan.It just has to be from another lender.

Online Lenders Often Break the Laws

If you visit a storefront payday lender, they are likely following the laws. Yes, they might be predatory scumbags, but they probably have a license with the state.

However, once you go online, it’s the wild west. Some online lenders play by the rules, but many do not. Many of the online lenders are based offshore or on Indian reservations (see this post on tribal loans for more info).

These lenders may not have a license and use loopholes like tribal immunity to bypass the laws. There is nothing — even the law — stopping them from giving you a second payday loan even if you already have one.

Will a Lender Give You Another Loan?

So yes, the law allows you to get a second payday loan if you already have one. But that does not mean a lenderwillgive you a second loan.

Before a lender gives you a loan, you give them permission to do a credit check on the loan application. When they do this, the credit bureaus — Experian, TransUnion and Equifax — report how many loans you have outstanding. Remember, the credit bureaus know everything about your transaction history. They know exactly how much debt you have. Then, they decide on whether they think you can repay it or not.

If a lender sees that you already have a loan, they may or may not be willing to give you a second one.

If a lender sees that you already have two loans, they are even less likely to give you another one.

If a lender sees you have five payday loans, they are significantly less likely to give you a sixth.

So the more payday loans you have, the less likely you will get another one.

How Many Payday Loans Can You Have at Once?

Multiple, but it’s complicated. This is because it depends on your location and the type of payday lender you are borrowing from. For example, in Washington state you can have up to 8 payday loans at once, where as in Texas, there is a unified payday ordinance in 45 cities that allows no more than 4 installments and 3 rollovers. Your best option is to check your state’s payday lending laws or ask your lender.

Please remember:

(Video) 'Payday loans...too good to be true?'

  • You should limit yourself to one or two payday loans at any time.
  • The payday loan trap is real and payday loans are expensive, which is why the industry is heavily regulated.
  • If you need to borrow another payday loan, try alternatives first before committing. If you do commit, do your research.

The More Loans You Have, The Worse the Terms Will Be

Before you think about taking a second, third or fourth cash advanceloan, you should consider the loan terms.

Because lenders have your credit report, they already know if you have outstanding loans. They know the types of loans, the loan terms, and other nitty-gritty of the loan agreement. They also know your credit score and credit history.

When they see you already have outstanding loans, they see you as riskier and more desperate. This means that they will charge you higher interest rates than your first loan.

The more loans you have, the worse the interest rates and fees will get. The annual percentage rate of your second loan will almost definitely be higher than your first loan.

If you’re looking for a second payday loan because you think the first one is bad, don’t expect things to get better.

You should assume that every additional payday loan you get will have worse terms than the previous loan.

Should You Get a Payday Loan If You Already Have One?

If you don’t pay back your payday loans, things can get ugly fast because of the high interest rates. You end up with a mountain of debt. It’s called thepayday loan trapfor a reason.

Before you know it, you have debt collectors blowing up every phone number you’ve ever had. Nonpayment fees. NSF fees. Your bank account is drained. You’re struggling with overdraft fees on your checking account. Every debt collection agency is on your tail.All because you meant to borrow some money you intended to pay back your next payday.

Why are payday loans so bad? Check out this video to learn more.

So, if you already have a payday loan, you should consider every alternative before you take out another.

Alternatives to Additional Payday Loans

Fortunately, there are several alternatives to taking out additional loans if you need to make ends meet.

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  • Credit Unions: Credit unions and similar financial institutions often offer small loans at much lower rates. Most credit unions give multiple types of loans, such as personal loans, bad credit debt consolidation loans and/or Payday Alternative Loans (PALs). This varies between credit unions.
  • Credit Counseling: Credit counselors can offer financial advice to help you enroll in a debt management plan. Some will offer financial products that help with this. They may negotiate with your lender for better terms and offer personal finance advice on how to budget or how to improve your credit score.
  • Renegotiate Payment Plans:Instead of taking out another loan, call your lender and ask for better payment terms, sometimes called an Extended Payment Plan (EPP). Even if they aren’t the friendliest, they do want their money back.
  • Credit Card Balance Transfer:Credit cards have a much lower APR than a typical short term loan. Many credit cards are meant for those with bad credit. Even better if you can get a balance transfer with 0% APR.
  • Ask a Family Member for Help:Nobody likes asking friends and family for money, but avoiding the payday loan trap is worth it. Ask your friends and family for a loan before taking out additional payday loans.
  • Loan Consolidation Programs:A number of payday relief programs help negotiate the total debt burden for those struggling with payday debt.

The Bottom Line

To summarize, the short answer is that yes, you can get another payday loan if you already have one. But in truth, it’s more complicated. You should not try to get more than one payday loan. You’ll end up trapped in a cycle of debt, and it could take months or even years for your financial situation to recover. Instead, explore some of the other options listed here first.

FAQs

What is a Cash Advance App?

Cash advance apps, sometimes called paycheck advance apps, are similar to payday loans but don’t charge interest. Instead, there’s sometimes a small monthly subscription fee, and they ask you to “tip” them for the convenience of your loan. Using these wisely is a much better alternative to payday loans. Dave and Earnin are good options, or you can find more information and other recommendations here.

Will I Go To Jail for Not Repaying a Payday Loan

Though a payday lender can sue you if you don’t repay your payday loan, it’s important to know that you will not go to jail for lack of payment. The charges you would face would be civil charges, not criminal. You could still end up in jail, however, if you fail to appear in court or ignore a court order.

What Can I Do If a Debt Collector is Calling Me at Work?

Debt collectors are notoriously aggressive, but you do have some protections through the Federal Trade Commission’s Fair Debt Collection Practices Act (FDCPA.) Federal law prevents the debt collection agency from calling you there if you inform a debt collector that you are not allowed to receive personal calls at work. If you believe your rights are being violated, notify the FTC or your state attorney general’s office.

Sources:

FAQs

How long do you have to wait to get another payday loan? ›

Once you pay off your payday loan, you can get a new one the next business day. After you get seven payday loans in a row, you will have to wait two days before you can takeout a new loan.

Can I get payday loans removed from my credit report? ›

In most cases, it is not possible to remove payday loans from your credit report. Defaulting on the payday loan might lead to a collection account which will also be reported to the credit bureaus by the collection agency.

Can you have 2 payday loans at once? ›

So yes, the law allows you to get a second payday loan if you already have one. But that does not mean a lender will give you a second loan. Before a lender gives you a loan, you give them permission to do a credit check on the loan application.

Can you get another loan if you already have one? ›

Yes. Many lenders allow multiple outstanding personal loans. You can take out a personal loan from multiple banks or online lenders, as long as you qualify. If you already have a lot of outstanding debt, however, a lender might not approve you for an additional loan.

Can you get a payday loan to pay off another payday loan? ›

If you want to consolidate payday loans, you'll need to apply for a personal loan from a credit union, online lender or bank. Once approved for a personal loan, you'll receive a lump sum of money that you'll use to pay off your payday lenders.

How long does unpaid payday loan stay in the system? ›

But, just like any lender, payday lenders keep records and defaulted payday loans will remain on your credit report for six years. And this default gets reported and affects your credit score. If your credit is already less-than-perfect, defaulting on a payday loan could damage your credit history for several years.

How do you get out of a payday loan nightmare? ›

It's hard, but the steps you'll need to take to get out of payday loan debt include:
  1. Request a repayment plan from your lender.
  2. Use lower-interest debt to pay off a payday loan.
  3. Commit not to borrow any more.
  4. Pay extra on your payday loan.
  5. Consider debt settlement or bankruptcy.
1 Nov 2022

Can lenders see payday loans? ›

Also, lenders will see you taking out multiple payday loans over a few months as a red flag. Lenders do not like to see many payday loans on your credit, even if they are all in good standing. Some lenders even state that they will not lend out money to borrowers who have taken out a payday loan.

How do I get out of a payday loan cycle? ›

Four Actions That Can Help Break the Payday Loan Cycle
  1. Attack high-interest debt first. If your debt is spread across multiple accounts, write down what you owe and focus on the ones with the highest interest. ...
  2. Ask about an Extended Payment Plan. ...
  3. Seek credit counseling. ...
  4. Explore other payback options.

What are 3 alternatives to getting a payday loan? ›

Best Alternatives to Payday Loans to Consider During a Crisis
  • Local nonprofits and charities.
  • Medical bill assistance.
  • Bad-credit online loans.
  • Credit union loans.
  • Payment plans for monthly expenses.
  • Other ways to make money.
  • Lending circles.
  • Family loans.
14 Nov 2022

What is the fastest way to pay off a payday loan? ›

How to Get Out of Payday Loan Debt
  1. Try a Payday Loan Consolidation/Debt Settlement Program. ...
  2. Prioritize High-Interest Loans First. ...
  3. Ask for Extended Payment Plans. ...
  4. See If You Can Qualify for a Personal Loan. ...
  5. Get a Payday Alternative Loan (PAL) from a Credit Union. ...
  6. Look into Nonprofit Credit Counseling.

Can debt consolidation help with payday loans? ›

Bottom line. If you're struggling to eliminate payday loan balances, a debt consolidation loan can help. They come with much lower interest rates, and you could get approved even with less-than-perfect credit.

How long should I wait between loan applications? ›

Wait for a 30 day cycle before applying for a loan.

Each time you apply for new credit, that credit application shows up as an inquiry on your credit report, which can lower your credit score. Don't apply for a loan and get rejected.

Can you get a loan if you already have loans? ›

So, yes, you can take out a loan if you already have one. You may even be able to take out additional loans if you have multiple already. It's not uncommon for people to have a personal loan, auto loan, mortgage, and even student loans at the same time.

How many loans can you get at once? ›

Technically, there is no limit to how many personal loans you can have at once. Lenders may approve a second or third loan if the borrower has paid off part of the first loan and has a history of on-time repayment. In fact, it's fairly common for one loan to fall short of covering all of a borrower's needs.

Do payday loans go away after 7 years? ›

The good news for you, Gabriela, is that the statute of limitations for written contacts where you live in California is four years. If the payday loan collection account is for a debt from 2014, then it seems like it is well past the statute of limitations. This means that the collector cannot take you to court.

How many times can you roll over a payday loan? ›

Legally, your payday lender should not offer you more than one rollover. The more rollovers you have, the more interest you will be paying on your loans. When lenders offer your rollover, they are required to provide you with an information sheet directing you towards free financial advice.

What happens if you forget to pay a payday loan? ›

A payday loan default can lead to bank overdraft fees, collections calls, damage to your credit scores, a day in court and garnishment of your paycheck.

Can I close my bank account to stop payday loans? ›

You can close your bank account to avoid an automatic withdrawal as a last resort. Be aware that stopping automatic withdrawals doesn't mean you don't have to repay the loan. You should try to negotiate other payment arrangements with the lender to avoid your account going to a debt collector.

Can payday loans come after you after 10 years? ›

In most cases, the statute of limitations for a debt will have passed after 10 years. This means a debt collector may still attempt to pursue it (and you technically do still owe it), but they can't typically take legal action against you.

Why is it hard to pay payday loans back? ›

Getting out of payday loan debt is difficult since this type of financing comes with high interest rates and short repayment terms. A majority of payday loan borrowers end up rolling over existing payday loans into new payday loans, incurring more fees and becoming trapped in a cycle of debt.

What is a payday alternative loan? ›

Payday alternative loans, or PALs, allow members of some federal credit unions to borrow small amounts of money at a lower cost than traditional payday loans and repay the loan over a longer period. These features can help borrowers avoid the potential debt trap created by high-cost, for-profit lenders.

What happens if you can't pay off your payday loan How can it put people in debt obligations? ›

Defaulting happens when you can't pay back your loans on time. This can cause your credit score to plummet, your wages to be garnished, and future loans to have high interest rates. Your loan also could get turned over to a debt collector, who will work to get you to pay back your debt in full.

How can I avoid paying payday loans legally? ›

Stop payment
  1. To stop the next scheduled payment, give your bank the stop payment order at least three business days before the payment is scheduled. ...
  2. To stop future payments, you might have to send your bank the stop payment order in writing. ...
  3. Be aware that banks commonly charge a fee for stop payment orders.
12 Jul 2022

Do payday loans approve everyone? ›

You can get approved for a payday loan even with a bad credit score or no credit score at all. However, no lender can fully guarantee a cash loan. Bad credit loans have a high approval rate, and most people get their payday loan request approved with no credit check.

What disqualifies me from getting a loan? ›

The most common reasons for rejection include a low credit score or bad credit history, a high debt-to-income ratio, unstable employment history, too low of income for the desired loan amount, or missing important information or paperwork within your application.

What is the easiest kind of loan to get? ›

The easiest loans to get approved for are payday loans, car title loans, pawnshop loans and personal loans with no credit check. These types of loans offer quick funding and have minimal requirements, so they're available to people with bad credit.

What is the best app to lend money until payday? ›

6 Loan Apps in 2022: Cash Advances and Overdraft Protection
  1. Earnin: Best for low fees. ...
  2. Dave: Best for repayment flexibility. ...
  3. Brigit: Best for budgeting tools. ...
  4. Empower: Best for fast cash. ...
  5. Chime: Best for overdraft protection. ...
  6. MoneyLion: Best for existing customers.
7 Nov 2022

What apps give you loans instantly? ›

Payday Loan Alternatives
  • Dave. With an Extra Cash account from Dave you can get up to $500 transferred to your checking account in 1-3 days for no charge. ...
  • Brigit. With Brigit you can get up to $250 instantly delivered to your checking account. ...
  • MoneyLion. ...
  • Empower. ...
  • Earnin. ...
  • Chime®
7 Nov 2022

Does paying back payday loans build credit? ›

Probably not. Payday loans generally are not reported to the three major national credit reporting companies, so they are unlikely to impact your credit scores. Most storefront payday lenders do not consider traditional credit reports or credit scores when determining loan eligibility.

What loans Cannot consolidate? ›

Private education loans are not eligible for consolidation. Direct PLUS Loans received by parents to help pay for a dependent student's education cannot be consolidated together with federal student loans that the student received. Learn what to do if you're not sure what kind of loan(s) you have.

How soon can reapply for loan after being denied? ›

If your application is rejected due to frequent job changes, consider waiting for a period of a minimum of six months with your current employer while working on your credit score before reapplying.

How can I get a loan after being denied? ›

Try these four short-term tactics to increase your approval odds if a lender denies your loan application.
  1. Prequalify With Other Lenders. Since different lenders have different lending requirements, try prequalifying with other lenders. ...
  2. Provide Collateral. ...
  3. Request a Lower Loan Amount. ...
  4. Increase Your Down Payment Amount.
29 Mar 2021

Can you apply for another loan after being declined? ›

How long should you wait to apply again after your loan application was declined? If you need a loan but keep getting declined, you might want to wait several months before applying again. For one thing, racking up a bunch of hard credit inquiries can harm your credit and look bad to a lender.

How soon can I get another cash advance from amscot? ›

There is a required 24 hour waiting period after you pay off or terminate a cash advance before you are able to obtain a new cash advance.

Can you have 3 loans with upstart? ›

You will also need to make 6 consecutive on-time payments toward your first loan, make your current payment on time, and have no more than one existing loan through Upstart.

What is a top up loan? ›

A top-up loan is a loan given by the bank over and above your home loan. Just like you top-up your mobile balance if you are running low on balance, similarly banks give top-up loans over your current balance.

Can a person have 2 loans? ›

Can one apply for multiple personal loans? It is unlikely for any lender to sanction two personal loans at the same time. If you are eligible for another personal loan from a different lender, it is not advisable for the borrowers to apply for multiple unsecured loans at the same time.

How long should you wait between loans? ›

Wait for a 30 day cycle before applying for a loan.

Each time you apply for new credit, that credit application shows up as an inquiry on your credit report, which can lower your credit score. Don't apply for a loan and get rejected.

How many payday loans can you have in Alabama? ›

Debt Limits

Maximum Number of Outstanding Loans at One Time: None (max loan amount allowed: $500 - see Code of Ala. §5-18A-12(a)).

Can you pay off a loan with another loan? ›

Debt consolidation combines multiple loans into one bigger loan amount from a single lender. That big loan pays off all your individual loans, so you just have one monthly payment to make. Your debt consolidation service may also offer alternative repayment plans that make your monthly bill more affordable.

Can you negotiate a payday loan? ›

Some, but not all payday lenders will negotiate with you. At the end of the day, they care most about getting their money back. Some have a strict no-negotiation policy, and others will only negotiate if you stop payments and can demonstrate that you really can't pay. Either way, it does not hurt to ask.

Can you get 2 payday loans in Alabama? ›

Generally, an individual can have up to three payday loans taken out at one time. However, if an individual has had problems with previous payday loans or has a history of bad credit, they may be able to have only two payday loans taken out at one time.

Can you go to jail for not paying a payday loan in Alabama? ›

The Consumer Financial Protection Bureau, which is responsible for regulating payday lending at the federal level, is very clear: “No, you cannot be arrested for defaulting on a payday loan.” A U.S. court can only order jail time for criminal offenses, and failure to repay a debt is a civil offense.

What do you do if you have multiple payday loans? ›

The best way to pay off multiple payday loans is to consolidate them into one new, lower-interest personal loan. This will make your monthly payments more manageable, and could potentially save you money by lowering your overall interest payments.

Can you go to jail for not paying a payday loan in Tennessee? ›

The payday lender can go to small claims court and get a civil judgment against you, but this does not allow them to send you to jail. A civil judgment allows a creditor to collect money by garnishing a percentage of the debtor's wages, or by levying a bank account.

Can payday loans access your bank account? ›

The loan is typically due by your next payday, generally in two to four weeks. If you don't repay the loan plus finance charges by the due date, the lender can cash your check or electronically debit your bank account. Many states that allow this type of lending set a cap on the loan amount and accompanying fees.

What is the largest payday loan you can get? ›

Payday loans usually oscillate in the $500 to $15,000 range (though, some of our top picks can get you something as low as $100). Personal loan lenders, meanwhile, could give you something between $1,000 and $50,000. Secondly, you'll need to repay your payday loan within a month (usually the next payday).

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