Most people typically turn to payday loans when they need money quickly before their next payday and don’t have access to other borrowing options. However, another unexpected expense can come up while you’re still trying to repay your first loan. So, in such a scenario, how many payday loans can you have outstanding at the same time?

Typically, this will depend on the regulations in your state, maximum loan amounts allowed, and lender policies. Read on to understand whether you can legally have more than one payday loan at a time in your state.  

How Many Payday Loans Can You Have?

While payday loans for bad credit can provide you access when you’re in a tight situation, it’s often not possible to take out more than one loan for a number of reasons. Here’s how state laws, loan amounts, and lender policies will determine how many loans you can have.  

State Laws

Due to the predatory lending practices of many lenders, many states have specific rules and regulations that lenders must follow. In the U.S., 37 states have specific statutes that allow payday lending. 11 jurisdictions don’t have specific statutory provisions, and/or require lenders to comply with rate caps.

Here are a few examples of regulations in different states:

  • Borrowers can only have one payday loan in California at a time.
  • Payday loans are banned in New York, so you can’t borrow them if you are a resident of NYC or live anywhere else in the state.
  • Multiple payday loans are allowed in Texas. However, lenders must follow specific loan terms and disclosure requirements.
  • Borrowers can only have one payday loan in Florida at a time. They must repay the existing loan in full and wait 24 hours before applying for a new loan.

Loan Amounts

Whether you can borrow multiple payday loans will also depend on your loan amount. Most states have a maximum total payday loan limit of $500 to $1,000 that these financial institutions must comply with. If your state’s maximum loan limit is $500 and you already have a payday loan of $300, you may be able to borrow an additional payday loan of up to $200 in some cases.

Here’s what you should know about maximum total loan limits in different states:

  • Alabama: $500
  • Alaska: $500
  • Arizona: Prohibited
  • Arkansas: Prohibited
  • California: $300
  • Colorado: $500
  • Delaware: $1,000
  • District of Columbia: Prohibited
  • Florida: $500
  • Georgia: Prohibited
  • Hawaii: Prohibited
  • Idaho: $1,000
  • Illinois: $1,000 (loan payments can’t exceed 25% of gross monthly income)
  • Indiana: $550
  • Iowa: $500
  • Kansas: $500
  • Kentucky: $500
  • Louisiana: $350
  • Maine: $2,000
  • Michigan: $600
  • Minnesota: $350
  • Mississippi: $500
  • Missouri: $500
  • Montana: $300
  • Nebraska: $500
  • Nevada: Up to 25% of gross monthly income
  • New Hampshire: $500
  • New Mexico: Prohibited
  • North Carolina: Prohibited
  • North Dakota: $500
  • Ohio: $1,000
  • Oklahoma: $500
  • Oregon: $50,000
  • Rhode Island: $500
  • South Carolina: $550
  • South Dakota: $500
  • Tennessee: $500
  • Texas: No specified maximum amount
  • Utah: No specified maximum amount
  • Virginia: $2,500
  • Washington: $700 or 30% of gross monthly income
  • Wisconsin: No specified maximum amount
  • Wyoming: No specified maximum amount

Lender Policies

Even if your state allows multiple payday loans, lenders may have specific policies that prohibit additional lending to you until you’ve paid off your existing loan. Some lenders may also have other requirements, such as verifying how much you earn and posing a restriction of not lending more than a predetermined percentage of your monthly income.

Consequences of Having Multiple Payday Loans at Once

Even if you can borrow multiple payday loans at once, keep in mind that these loans come with very high finance charges and loan fees that often equate to a 400% annual percentage rate (APR). These finance charges can quickly add up, and you risk getting stuck in a debt cycle. Here are a few risks you should keep in mind.

Increased Debt

When you borrow a payday loan to pay off a bill, you still owe a debt that you need to pay back within a very short period of time, usually when you get your next paycheck (in as little as) just a few days later. Keep in mind that you also have to pay for your living expenses in addition to repaying the loan, so it’s important to budget your income and expenses very carefully when considering taking on one of these loans.

With multiple payday loans, this problem can compound, and the increased debt can quickly make your financial situation worse.

Added Fees and Interest

Payday loans have triple-digit interest rates. When you borrow another loan before paying off your existing one, there are added fees and interest charges to pay on your new loan, in addition to the interest you’ll pay on your existing one. Interest and additional fees can quickly add up, making it very difficult for you to get out of the cycle of debt.

Credit Score Damage

Accumulating too much debt and failing to repay your payday loans can hurt your credit significantly. If you have other existing debts, such as credit card balances, it can be harder to keep up with those payments, as well.

If your payday loan or credit card debt goes to a collection agency and your lender reports the loan default to the credit bureaus, your credit reports and respective FICO scores with each one can be damaged quite seriously. This can make it very difficult for you to get a loan in the future, and you’ll be more dependent on predatory loans that don’t require a credit check.

Alternatives To Borrowing Multiple Payday Loans

If you need money, there are a number of other alternatives to consider instead of borrowing more than one payday loan:

  • Budgeting: Sometimes, budgeting and some common-sense money management techniques may be all you need to free up some cash. Review your monthly expenses, trim anything unnecessary, and start a side hustle or take a second part time job to generate some extra cash and avoid the debt trap.
  • Other Borrowing Options: Use a fee-free or low-fee cash advance app to borrow money at a lower cost. Consider other lending options like a bad credit personal loan, lines of credit, small loans from credit unions, or peer-to-peer installment loans that are available at a lower rate compared to payday loans.
  • Borrow from Friends or Family: This will usually give you access to money at a much lower interest rate. Be sure to have a clear repayment plan in place to avoid damaging your relationships with the people in your life who have lent you a hand.
  • Government Benefits: Check to see if you qualify for government benefit programs, such as food stamps, rental assistance, Social Security, or unemployment benefits.
  • Seek Help: If you’re finding it difficult to keep up with your expenses or if you have too much debt, consider credit counseling or debt settlement.

Borrowing Multiple Payday Loans at Once is Risky

The number of payday loans you can have at once varies based on state regulations, maximum loan amounts, and payday lender policies. However, with the high costs and predatory lending practices, it’s best to understand how payday loans work and avoid relying on these high-interest-rate loans too often.

When possible, consider safer alternatives like personal loans for bad credit, cash advance apps, and borrowing from friends and family members. Seek credit counseling to learn money management and budgeting techniques to avoid accumulating a lot of debt.