Payday loans offer a short-term solution for those looking to borrow money. While there are advantages of payday loans, it is wise to proceed with caution when taking out multiple loans of any kind.
If you’re thinking of initiating a payday loan and want to know more about how many you can have at once, here’s what you need to know:
What exactly is a payday loan and how many payday loans can you have at once?
A payday loan is a short-term arrangement, which gets its name from the fact that people usually borrow a sum of money and then pay it back once they’ve received their wages. Payday loans can cover a range of costs and eventualities, from helping to pay rent and bills to paying for a spur-of-the-moment vacation.
The idea is that you apply for a payday loan, you get approved and the lender transfers the money to you, and you pay it back with the fee within a specified time period, just as you would any other loan. However, payday loans are much shorter term than most loans, which means the terms and agreements associated will vary greatly from a traditional loan agreement. In most cases, you agree to pay a payday loan off within a matter of weeks rather than months or years. A payday loan is also a single payment loan which makes it very simple and easy to use. The fees are included in the payback amount so it is also very easy to understand how much the loan will cost you.
In some cases, people might feel like they need to borrow more than one payday loan, but aren’t sure how many they can have at once. The answer depends on the lender and the state in which you live, but taking out additional payday loans is virtually never a good idea.
According to California Law, there are several limitations that make it near impossible to take out two payday loans at once. California imposes a $300 limit on payday loans, and loans cannot be held for longer than a period of 31 days. You are not allowed to rollover payday loans, and lenders are prohibited for charging for a loan extension. Also, in California you are only allowed to have one loan at the same lender at one time. Therefore California lenders are prohibited from giving you a second loan until the first one is paid off.
All in all, taking out more than one payday loan means that you’re committing a substantial amount of your paycheck to lenders to pay for loans and interest, and this could put you under even greater financial stress. Rather than taking out another payday loan, it may be best to explore other options.
Why shouldn’t you take out multiple short-term loans?
Payday loans can be incredibly useful for those who need to pay off bills or cover expenses in the short-term. But taking out more than one short-term loan is not a wise idea because it puts you at risk of being unable to pay back multiple loans in the required time frame.
The idea of a payday loan is to borrow funds from your future paycheck, as it were, and pay the loan back when you receive that future paycheck. If you have multiple loans to pay back plus interest by the time you get paid again, you may have nothing left from your next paycheck, or even worse, you may end up still owing even after you’ve given your entire paycheck to loan expenses.
What are the best alternatives?
As mentioned, taking out a loan with a longer term rather than extending a payday loan can often be a good option for those who need a greater loan amount or term. If, however, you simply need an immediate payday loan with a reasonable interest rate and terms, it’s best to work with an established payday loan lender such as Cashback Loans to get the funds you need right away.
At Cashback Loans, we not only offer single payday loans that are deposited in your account within minutes, but we also enable you to explore other loan options if you need something with a longer term. Our experts are here to help you relieve financial stress and stay on the right track toward paying off debt, and we are always on your side when it comes to figuring out the best options for dealing with immediate financial need.