If you have bad credit, a low income, or other financial problems that would get you denied for financing through your bank, a payday loan is an easy way to access fast cash. However, these loans come with high-interest rates, as well as short repayment terms of as little as two weeks. Typically, you’ll need to repay the full loan, plus interest and fees, all at once.
The question is, can you take out multiple payday loans at once? If so, what are the risks associated with carrying more than one payday loan at the same time?
Key Points
- Carrying multiple payday loans at the same time is not recommended, as it risks overwhelming debt and difficulty managing repayments.
- Rollover loans, which involve taking out another payday loan with the same lender to repay an existing payday loan, are not permitted in Canada.
- There may also be stipulations about how long you must wait to apply for another loan with the same lender until after the first loan has been repaid.
- Rather than taking out another payday loan, there are other alternatives to consider, such as cash advances and lines of credit.
Can I Get Multiple Payday Loans At The Same Time?
Yes, you can get multiple payday loans at the same time in Canada. However, you cannot get multiple payday loans at the same time with the same lender. This is because the provincial government has imposed laws that prevent lenders from offering “rollovers”.
That said, your ability to get payday loans with multiple lenders at the same time depends on their underwriting process. However, it’s recommended that you wait until after you’ve repaid your existing payday loan before applying for another one.
What Does It Mean To ‘Roll Over’ Your Payday Loan?
Multiple payday loans from different lenders should be distinguished from “rollover” loans. A rollover loan is when the remaining balance owed from your first loan is combined with, or ‘rolled’ into, a second loan. Thus, on your next due date, you will owe the amount from both your first loan and your second loan, creating what is called the payday loan debt cycle.
Some borrowers may consider applying for another payday loan with their lender as a way to repay their existing payday loan if they’re struggling to pay by the due date. However, rollover loans are not only potentially dangerous because of the additional debt, but they’re also outlawed in all of Canada.
What Provinces Do Not Allow Rollovers?
Rollovers are no longer available in any province in Canada. Over time, each province has ruled out rollover loans, which means payday lenders are not permitted to offer back-to-back payday loans to borrowers as a means of repaying an existing loan.
Can I Get A Second Payday Loan If I Pay Off My First?
Yes, if you pay off the full balance of your first loan and wait an appropriate amount of time before applying again, most lenders will approve you for a second payday loan. That said, there are a few things you should do before you apply again, such as:
- Consider Your Budget – After you’ve paid your first loan, you may be strapped for cash. So, it’s probably not a good idea to take out another payday loan if you won’t be able to afford it when combined with your other expenses.
- Consider High Interest Rates – Payday loan rates are notoriously high, which can make a seemingly small loan turn into something that can be difficult to repay. So, make sure you’re fully aware of the entire cost of the loan before taking one out.
- Make Sure You’ll Be Able To Repay Within A Short Time Frame – Payday loans must be repaid in one lump sum within a very short term, often within two weeks. Make sure you will have the funds available to repay the full loan amount, including interest and fees, before applying.
What Happens If I Manage To Get Multiple Payday Loans At The Same Time?
If you apply for another payday loan with the same lending company, they’ll be able to see in their system whether you have a loan currently. It’s unlikely that you will get a second payday loan from your original lender because you’re already in their system, unless they choose to skirt the law.
But it’s possible to get a second loan from a different lender if you pass their underwriting process. That said, if you manage to acquire two payday loans at the same time, you should be aware of the risks:
Increased Debt
Having multiple payday loans leads to an accumulation of debt, especially considering the sky-high interest rates associated with these types of loans. This can cause you to spiral into a seemingly unending cycle of borrowing more just to repay previous loans.
Difficulty Repaying Your Debt
Payday loans are very short term, which means they’re typically due by your next payday. Juggling multiple payday loans means you’ll have several repayments due at the same time, which can be financially daunting, particularly if you have a limited income.
Impact On Your Credit Score
Payday loans don’t directly affect your credit score, since no credit is usually involved and payments are not reported to the credit bureaus. But if you’re unable to repay your payday loan debt, the lender could eventually refer your debt to a collections agency, which will be noted on your credit report and will negatively affect your credit score.
What Can I Do If I Can’t Afford To Repay Multiple Payday Loans?
If you’re struggling to pay back multiple payday loans, consider the following options:
Speak With Your Lender
Many payday lenders are open to working with borrowers to come up with an extended payment plan in the event of financial distress. These plans allow borrowers to spread out their loan payments over a longer time, which gives borrowers more time to repay.
For instance, in Ontario, the law requires lenders to offer an extended payment plan option if you take out 3 loans within 63 days. Then, you can make repayments any time without incurring penalties.
Get Help From A Credit Counselling Agency
Credit counsellors can help you negotiate with lenders or come up with an alternative payment plan that suits your budget.
Consider Debt Consolidation
Consolidating your debt involves combining all your debt into one, easily-managed payment, ideally at a much lower interest rate. This can help streamline your finances and save you money in interest payments.
Payday Loan Alternatives In Canada
Filters
- Amount
- Up to $35,000
- Rate
- 9.99% - 46.96%
- Term
- 9 - 78 Months
- Amount
- Up to $60,000
- Rate
- 19.99% - 39.99%
- Term
- 6 - 120
- Amount
- $1,500 – $10,000
- Rate
- Varies by province
- Term
- Varies
Can I Get Another Type Of Loan If I Have A Payday Loan?
If you’re having trouble paying off your current payday loan and are looking to take out another loan to help repay your existing loan, you won’t be able to apply for another payday loan with the same lender, as already mentioned. However, there may be other options available to help you deal with your pressing financial issues.
Just keep in mind that adding more debt can make things more difficult for you in terms of paying off your outstanding loan balances.
Credit Card Cash Advance
If you have a credit card, you may be able to take out a cash advance at an ATM. This can provide you with instant cash without having to undergo an application. Although you’ll have to pay a $20 to $30 fee and 19% to 24% interest daily, the cost of a credit card cash advance may be lower than what you would pay for a payday loan.
Personal Loan
Many alternative lenders can also offer you a more traditional installment loan, even if your finances and credit aren’t great. Terms are often flexible (several weeks, months, or years) and rates vary from 8% to 47%. Even if you don’t have great credit, you still qualify for a loan with an alternative lender.
To increase your chances of qualifying for a personal loan with bad credit, reduce your current debts by as much as you can. This will reduce your debt-to-credit ratio, which is a common factor used by lenders to determine creditworthiness.
Overdraft
Some bank accounts allow you to withdraw more money than your bank balance. You can opt to add overdraft protection to your account if offered by your bank.
Most overdraft protection has a monthly fee or a per-use fee, for example, $5. Furthermore, you’ll typically be charged a set daily interest rate on the amount you overdraw. Overdraft protection and fees vary greatly depending on the bank.
Auto Title Loan
You could also consider a vehicle title loan, in which your vehicle is used as collateral to secure the loan. While this can be an expensive option, it is more affordable than a payday loan, and you’ll benefit from installment payments and a longer repayment term.
Small Cash Advances And Credit Lines
Small credit lines and cash advances may help you access fast cash without the need for good credit to qualify. A couple of options to consider include the following:
- Nyble: Nyble’s line of credit allows you to access up to $250. You won’t have to undergo a credit check, and the funds can be repaid whenever you’re able to pay. Plus, no interest is charged on the withdrawn amount, and on-time payments can help you build good credit.
- Bree: Bree’s small cash advances can help you cover urgent expenses or avoid overdraft fees. You can borrow up to $350 and repay the funds when you can. No credit check is required, and no interest is charged on the borrowed funds.
Find Out How Much You Qualify For
Final Thoughts
Payday loans may help you financially over the short term, but they can lead to long-term consequences if you’re not careful. This is why provinces across Canada have enacted legislation that prohibits rollover loans, so borrowers are not stuck repaying multiple payday loans at once. Ultimately, taking on more than one payday loan is never a good idea.
