If I Owe a Payday Loan, Can I Get Another? Yes, But You Probably Shouldn’t

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

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.

Source: DebtHammer.org

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. In Texas, 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.

States With Loan Limits — You Can Still Get a Second Loan

In Virginia, for example, the maximum loan amount is $500. But that does not mean you can only borrow $500. All this means is that any individual lender can 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.  

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 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. 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:

  • 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 advance loan, 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 the payday loan trap for 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.

  • 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.

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