Since their inception in the 1990s, payday loans have become a convenient and flexible solution accessible to anyone who requires emergency funds. Payday loans are short-term loans that are commonly paid back with your next paycheck, have high-interest rates, and accept bad credit scores.
Unlike the cash advances you get through regular banks, payday loans are so popular because lenders often have less stringent eligibility criteria that don’t require complicated credit checks. Furthermore, they are quick to obtain, have flexible repayment terms, and, more often than not, there is always room to take up a second payday loan.
The Legal Framework for Multiple Payday Loans
While it is interesting to think payday lenders have the monopoly on deciding who they can advance their loans to, this is not entirely true. For the most part, the government primarily oversees the payday loan industry.
For instance, in the United States, the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) formulate policies and operational guidelines for payday loans.
Nevertheless, their guidelines do not have complete control over lending companies. This explains why different states in the country have varying legal frameworks as to how many payday loans an individual can take out at a time.
For example, the state of Texas has no restrictions on the number of payday loans you can take at a time. While in California and Florida, you are only allowed to take one payday loan at a time.
This is not to discourage you. These regulatory restrictions and frameworks for payday loans can be flexible. The payday lender also has the discretion to advance further loans if they want to. Therefore, it is easy to find online payday lenders willing to bend the rules and advance a second payday loan.
To an extent, most payday loan connection services are always in the business of helping you beat the rigors created by these government laws. For example, MoneyZap links you with online payday loan lenders that are willing to advance payday loans to meet your pressing needs while you await your next paycheck.
Understanding Payday Loan Rollover or Renewal
Every payday loan has a repayment schedule borrowers are expected to repay. In the event of default, lenders have formulated packages to help facilitate your loan repayment with higher interest and penalty fees.
The concept of a payday loan rollover is to create a default penalty, which can come as a fixed or percentage rate of interest. Although it affords you the flexibility to pay back your outstanding payday loans whenever you can afford them, it is not a second payday loan.
For example, a typical payday loan might give you $300 with an accumulated interest of $30, repayable with the principal within fourteen days.
Upon nonpayment, the payday loan lender may charge another $30 for the rollover of the loan for the next fourteen days. This has brought an increment of $60 on the initial loan. Should this trend go on, it may lead to accumulated loan interest that supersedes the initial loan amount.
Without a good repayment strategy, you will find yourself in a payday loan trap with a huge debt to wallow in. This is why MoneyZap offers credit counseling and only works with reliable and licensed lenders—all 100% free of cost.
Borrowing from Different Lenders
You are not the first to think of borrowing from different places when you run out of options or after hearing from your credit counselor that rolling over your loan puts you further into the payday loan trap. Nonetheless, the possibility depends largely on the lender’s discretion and how far the government allows it.
Depending on the way you view it, restrictions on the number of payday loans you can take are largely for your own good. No one wants you accumulating a lifetime of debt, which is why structures are put in place to keep you from abusing the idea behind payday loans.
While getting multiple payday loans from different places is possible, it could be more difficult in practice. This is because payday lenders still conduct a credit check to determine if you can pay back what you intend to borrow.
Remember that payday loans are meant for extreme emergencies and short-term purposes only. They are not a perfect substitute for your regular bank loan.
Furthermore, multiple loan payments will trap you in a cycle of debt, especially when your income cannot offset your debt on time. Instead of taking up a second loan, considering other financially beneficial alternatives may be of greater advantage.
Alternatives to Multiple Payday Loans
1. Explore Local Resources
Sometimes, the hardest thing to do is to accept our financial defeats. Fortunately, local agencies, governments, and charitable organizations are always willing to help provide free aid for necessities, such as food, rent, and clothes. They are a temporary alternative to picking up a second loan that will further drown you in debt.
2. Work Multiple Jobs
Suppose you could take up other jobs to increase your source of income. This strategy will not only help you offset your initial loan on time, but it will also help you leave bad credit behind and live a life free of debt.
3. Create a Strategy
Creating a financial strategy for spending your money goes a long way towards maintaining financial balance. To avoid taking a cash advance, create a savings plan and an expenditure plan. A robust bank account leaves you with something to fall back on.
Payday Loan Consolidation
As a last resort, borrowers of multiple loans often seek the help of payday loan relief companies to consolidate their loans, especially when they are from different lenders. Premium payday loan relief companies, like Monyzap, help you make multiple loan payments by consolidating them into a single loan.
Furthermore, they help negotiate interest rates with your lenders so that you end up paying less than what you originally owed. In addition, these payday relief companies offer credit counseling and debt management strategies through their debt experts to help you create a scalable debt payment plan.
However, no matter the help your payday loan relief provider offers, your debt is still debt you have to pay. Also, further nonpayment of consolidated payday loans could negatively reflect on your credit score.
Frequently Asked Questions
Can You Have More Than One Payday Loan at a Time?
Yes, but many factors determine this. Finding lenders ready to give you more than one payday loan will not be a problem if you are in a state or country where multiple payday loans are allowed.
Nonetheless, if the laws where you reside are against multiple loans, you may not have access to this option. Even if you do, stringent criteria are often imposed by lenders.
Can I Take Out a Loan if I Already Have One?
No matter what, make sure you do not owe more in loan repayments than what you earn monthly. Even if you have the opportunity to take out another loan, it is not often the best course of action.
Loans are meant to cater to sudden expenses and emergencies that cannot be taken care of with your regular income. Thus, drawing multiple payday loans will further increase your debt and lower your income power to overturn it.
In addition, most lenders always want to ascertain whether or not you can pay them back before granting you additional amounts. You can take out payday alternative loans from the same lenders if they allow it, or you could look for loans from different places.
Can You Take Out Payday Loans From Two Different Places?
Yes, you can. However, this option ultimately depends on your state laws, lender, and financial situation. Lenders are usually reluctant to advance other loans when you have an unpaid loan.
This is essential to save you from entering a devastating debt cycle and protect the lender’s business. Still, if your credit check is remarkable enough to indicate past prompt payments and a considerably healthy income, you may be able to access multiple loans.
How Many Payday Advances Can You Have?
Typically, you can only have one payday advance at a time. In contrast, if your state laws permit multiple payday loans, you may do so.
Nonetheless, other deciding factors help determine your eligibility, such as your credit score, income, and the lender’s discretion. Also, it would help if you considered the interest rates these multiple loans attract and the possibility of offsetting the loan proceeds and the accruing interest from your income.
Can Two Different Loans Be Drawn From a Single Joint Account?
When applying for a payday loan, a joint account is considered a single account. Therefore, unless the lender is willing and your state allows it, two different loans cannot be processed to one joint account. Note that this applies to requesting another cash advance with the same lender and with a different lender.
A signatory of a joint account looking to process a different payday advance might have to use a different account to meet all the loan requirements of the prospective lender.
Will Lenders Check My Payday Loan History Before Advancing Another Loan to Me?
There is a subtle misconception that payday lenders don’t conduct credit checks for payday loans. This is not entirely true. Lenders will always perform due diligence on your financial situation and credit score to ensure that you can repay the loan amount requested. This type of check is called a soft credit inquiry, and it doesn’t affect your credit score—hard credit checks are what impact your credit score.
Also, depending on the preference of your lender, you don’t necessarily need to earn income from paid employment. For example, lenders are willing to accept your unemployment benefits and other financial aid as income when granting you a loan.
Therefore, it doesn’t matter if you don’t have a job. What matters is that you don’t have a lot of debt obligations, and you have a source of income that could offset your debt.