Payday Loan explained...

While it isn’t very common, there are some people who take out more than one payday loan at a time. This can seem to be the ideal solution if you need more than what one lender will give you. For example, you may need to borrow £500. One lender may only offer you £250 which would mean you would be £250 short. By applying to another lender you could get the additional money that you need. There are no laws saying that you cannot have more than one payday loan at a time. However, is it really a good idea?

The Potential Dangers of Multiple Payday Loans

As with any type of credit, multiple payday loans can seem like a great idea at the time. However, in reality having more than one debt can become extremely stressful. What if you cannot make the repayments on the loans? Defaulting on more than one loan will cause you to get into serious financial trouble.

Payday loans do tend to come with high interest rates. Some rates can be as high as 2,500%. This means that if you miss your repayment, the interest that you pay on one pay day loan could add up to hundreds of pounds. Therefore if you default on two loans, that fee would turn into thousands of pounds. Nobody starts out with a loan thinking that they will not be able to pay it back. However you do need to consider the worst case scenario before you agree to any loan. Think about what would happen if for whatever reason you did default on both payday loans.

One thing that many people do not realise with payday loans is that they do show up on your credit report. They may not carry out credit checks, but they do have to give your details to regulators once the loan has been agreed. This will go on your credit report and future creditors can see it. It is also worth pointing out that even though they claim they do not look at your credit report, some payday loan lenders will browse through your records to identify who you are. Therefore they may know if you already have a payday loan out at the moment.

One of the biggest mistakes that you can make is getting two or more payday loans on the same day. If you are going to apply for two or more loans then you should ensure that the repayment dates are different. This will give you a better chance of paying off both loans when they are due. It is definitely a better option to split the repayments into two, rather than having a large sum coming out at the same time.

Overall it is never really a good idea to have more than one payday loan out at a time. The potential stress and financial trouble that it could cause if you default on the loans is not worth it. If you do have multiple payday loans and you are currently in financial trouble, why not consider consolidating the loans if you can?