Payday loans are short-term loans, generally for $500 or less, that are designed to provide quick cash to help with an emergency expense or to bridge a gap between paychecks. The number of payday loans that borrowers can have open at once depends on the laws of the US state that they live in.
Some states, such as Ohio, have laws that cap the number of payday loans a person can have to 1 loan at time. Other states, such as Colorado or Texas, do not have any specific laws in place regarding how many payday loans a person can have open at once.
However, even in states where you can borrow unlimited payday loans, it is not advisable to take out several loans at a time as this could potentially lead to a spiral of debt. You do not want to be overdependent on high cost financial products and so 1 or 2 loans at one time is a sensible limit.
How Many Payday Loans Can I Borrow At Once?
There are rules and regulations in different US states that dictate how many loans can be borrowed at once. Some examples of payday loan state regulations are summarized in the table below:
|State||Number Of Payday Loans Allowed At Once|
In Which States Can You Can Get Unlimited Payday Loans?
Currently, you can borrow an unlimited number of payday loans in Colorado, Nevada and Texas. So in theory, you could take out 2,4 6, 8 or even 10 payday loans if you wanted to. However, this is not recommended and could lead to severe debt.
Whilst there are no restrictions on how many payday loans you can have at once in Louisiana, there is a maximum loan amount of $350 which would make it difficult to take out several loans. Rollovers are also not allowed in Louisiana.
Why Should I Not Take Out Too Many Payday Loans At Once?
Payday loans have very high interest rates and fees, making them an expensive option for borrowing money. If a borrower has multiple payday loans open at once, the costs can quickly add up and make it difficult for them to pay back, especially if there are late fees involved. Having multiple payday loans at once increases the likelihood of defaulting on 1 or more loans so it is not recommended to take out more than 1 or 2 payday loans at a time, since the interest and fees can quickly add up and create a spiral of debt.
Multiple payday loans can also cause a borrower’s credit score to drop. This could make it more difficult for them to access similar loans and other forms of credit in the future.
Those finding themselves in a situation whereby they are considering taking out multiple payday loans should look into other options that may be available to them. Examples including borrowing money from family or friends, or applying for a low-interest credit card.
What Should I Do If I Need Multiple Payday Loans?
If you need multiple payday loans at any one time, it is probably best not to apply for more. Whilst a few payday loans might be okay if you organize your finances carefully, you do not want to risk falling into an expensive trap. Most states will not legally permit you to borrow more than 1 or 2 payday loans, and they are also very costly and could weigh you down financially.
If you need to borrow money now, you could consider alternatives to a payday loan. Other options include:
- Lending money from family and friends
- Using a secured loan
- Requesting an authorized overdraft from your bank
- Selling unwanted items at a garage sale or online to bring in some extra dollars
- Applying for a low-interest credit card
- You could sign up to a credit union
- Speaking to your employer and asking for a salary advance
You could also try to pay off any existing payday loans early then look for a larger loan amount. This could be a better option since you would have less loans open – just check the terms and conditions of your loan agreement before doing so to make sure there are not any fees for early repayments.
You could also look at ways to manage your finances more effectively and to budget more carefully. For instance, you could look at shopping at cheaper grocery stores or meal prepping to help save a few extra dollars. Maybe you could skip unnecessary expenses this month such as take aways or shopping sprees to help get your finances back on track.
If you are looking to avoid another payday loan, there are also many ways you can save money on petrol or on your energy bills around the house. Loans do not have to be your only option and whilst they can be useful if you are in need of fast cash, you should always consider all your options before applying for another payday loan.
Justine is a full-time writer with lots of expertise and a wealth of experience in the financial world. In particular, she specializes in household income and consumer finance across the United States. Follow her articles for useful advice and top tips, guides on how to save money and lots more.