Personal Loans Blog

Finance Blogs » Personal Loans Blog » Get a 2nd personal loan?

Get a 2nd personal loan?

By Mike Cetera · Bankrate.com
Wednesday, August 3, 2016
Posted: 3 pm ET
Get a 2nd personal loan?

Brian T. Evans/Getty Images

Shortly after I paid off my personal loan, an email popped into my inbox. We want you back, it read.

The 4-sentence note:

  • Thanked me for paying off my loan. (As it was an experiment, I paid it off within days of receiving the cash.)
  • Let me know I'm eligible to apply for another loan. (So fast?)
  • Told me there would be "no impact" to my credit score. (Wait. What?)

Lending Club sent this email to me a month ago, and it's left me figuratively scratching my head ever since. Is this all true?

I've asked the online lender repeatedly for comment on its email, but have received no response. That being said, lenders appear to have varying policies when it comes to repeat customers, but pretty similar ones when it comes to credit checks.

RATE SEARCH: Find a personal loan today that fits your needs.

"To confirm, there is 'no impact' to apply (or re-apply) because credit pulls are not marked as a 'hard inquiry' until the person originates the loan," Remi Harrad, a spokeswoman for online lender Prosper Marketplace, told me in an emailed response to questions.

In other words, lenders (many of them, anyway) don't perform the type of credit check at the time you apply for a loan that shows up on your credit report and can shave a few points off your credit score. They wait until the money is heading your way to make a hard inquiry.

If you get approved for a 2nd personal loan, expect another inquiry. Harrad says repeat borrowers could not qualify based on the original credit check, which is only good for 30 days.

Lending Club's semantic vagueness aside, the tiny legalese posted below the warm invitation to borrow more money suggests this lender, too, will re-check credit: "All loans are subject to credit approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage, and credit history."

When can you apply again?

A number of the big online lenders have explicit policies about borrowers opening multiple loans.

Lending Club, for example, says borrowers can have 2 "active" loans at the same time, according to the lender's website. To qualify for a 2nd loan -- whether or not a borrower has an open loan at the time -- the borrower has to have made a year of on-time payments on the first loan.

There's a caveat: "Sometimes we identify customers who are eligible for an additional loan before those 12 months and ask them to apply." (That would be me, 2 weeks after I made my only payment.)

RATE SEARCH: Let Bankrate help you find a great personal loan today.

Prosper borrowers must wait a minimum of 6 months after they receive their 1st loan before applying for another loan. The online lender also demands no late payments within the last 60 days on existing loans and 2 or fewer returned loan payments within the last 3 years.

Meanwhile, online lender Upstart says you can apply for a 2nd personal loan only if you have made your last 6 consecutive payments on time and owe no more than $50,000 on the existing loan. When applying for another loan after paying off an existing Upstart loan, the lender requires a 60-day "cooling-off period."

Should you apply again?

Four months ago, I wrote that taking out a 2nd personal loan could be a red flag that your finances aren't in good shape. Here's why.

TransUnion -- 1 of the 3 major credit bureaus -- found that borrowers who open multiple personal loans are nearly as likely to increase credit card debt as they are to cut it. Since most personal loans are used for debt consolidation, adding to existing debt makes the act of consolidation fairly pointless.

"Those who repeatedly 'go back to the well' for these products do so, it would appear, due to constrained finances," TransUnion researchers wrote. "We suggest that lenders be aware of repeated use of these loans, which may indicate consumers are trapped in a debt cycle, and consider alternative approaches to helping those consumers."

If this is you, you don't need another loan. You need help. Start with the National Foundation for Credit Counseling.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
1 Comment
First Merit
March 27, 2017 at 8:02 pm

Do you need an urgent loan to support your business or in any
purpose? we are certified and legitimate and international licensed
loan lender We offer loans to Business firms, companies and
individuals at an affordable interest rate of 2% , It might be a short
or long term loan or even if you have poor credit, We shall process
your loan as soon as we receive your application. we are an
independent financial institution. i have built up an excellent
reputation over the years in providing various types of loans to
thousands of my customers. i Offer guaranteed loan services of
any amount to citizens and non-citizens i offer easy personal
loans, commercial/business loan, car loan, leasing/equipment
finance,debt consolidation loan, home loan, for all citizens and
non-citizens with either a good or bad credit history. If you are in
need email (Firstmeritbank01@gmail.com)
you can email me with your information.

Add a comment

(Comments may take 5-10 minutes to appear)