If you’re juggling multiple financial commitments right now, like a personal loan, a couple of credit cards, and that car loan – you’re not alone. Thousands of Australians manage several loans at once, especially when unexpected expenses keep popping up. It’s completely normal to wonder, “Am I borrowing too much? Will my existing loans stop me from getting approved for another one?“
The good news is, having multiple loans doesn’t automatically mean you can’t get approved for another one. What matters is understanding how lenders view your financial situation and knowing when you might be stretching yourself too thin.
Let’s break down exactly how it all works, how many loans can you have, and what “too many loans” really means for your financial future.
Understanding How Loan Applications Work in Australia
When you apply for any type of loan in Australia, lenders don’t just look at the amount you’re asking for. They need to see the complete picture of your financial life. Think of it like a health check-up – they’re making sure adding another loan won’t cause you financial stress.
Every time you submit a new application, lenders will carefully check:
- Your current debts – all the money you already owe
- Your income and expenses – what’s coming in versus what’s going out
- Your repayment history – how well you’ve managed previous and current loans
This isn’t the lender being nosy. They’re legally required to make these checks to ensure they’re lending responsibly. If you’ve been declined before, understanding these factors can help you improve your chances next time. Learn more about why loans get declined to better prepare for your next application.
Do Existing Loans Affect Your Chance of Getting a New One?
In short, yes, your existing loans do affect your chances of getting approved for a new one. But it’s not as simple as “you have loans, so you can’t get another one.” Lenders look at your whole financial picture to determine if you can comfortably manage another repayment.
What Lenders Actually Assess
When reviewing your application, lenders don’t just look at every single financial product you have. The key factor is how many recent loans you’ve taken out, especially within the last month or so. Taking on multiple new loans in a short space of time can be seen as high-risk behaviour and will likely reduce your chances of approval.
Instead of a long checklist, lenders are particularly alert to:
- Multiple loans taken out within a short period (e.g. within a month)
- Applications with different lenders close together
- Signs of “credit shopping” or frequent borrowing behaviour
- Odd transaction behaviour, including frequently moving money between different bank accounts
Your credit report still plays a role, showing whether you’ve managed repayments well, but the main way to keep your application in good standing is to avoid taking out too many new loans in quick succession.
The Debt-to-Income Ratio That Matters
One key factor lenders consider is how much of your income goes toward repayments. If loan repayments are eating up 30–40% or more of your income, the risk of rejection increases significantly. For small amount credit contracts (SACCs), repayments are legally capped at 10% of your income – a protection designed to prevent financial hardship.
Example scenario:
Let’s say Sarah earns $3,000 per month. She has a personal loan ($400/month), a car loan ($350/month), and minimum credit card payments ($150/month). That’s $900 in repayments – 30% of her total income. If she applies for a home loan, the lender might worry that adding another large repayment could push her into financial stress.
Responsible Lending Laws in Australia
Australian law is actually on your side when it comes to borrowing. All lenders must comply with strict regulations designed to protect you from taking on loans you can’t afford.
The National Consumer Credit Protection Act 2009 (NCCP Act) and the National Credit Code, enforced by ASIC, require lenders to:
- Make reasonable inquiries about your financial position
- Verify your income and expenses through documents like payslips and bank statements
- Ensure the loan won’t cause you substantial hardship
These aren’t just guidelines – they’re legal obligations. If a lender approves a loan without proper checks, they’re breaking the law.
How Many Loans Is “Too Many”?
There’s no magic number or legal cap on how many loans you can have. What matters is whether you can manage them all without financial stress. Some people comfortably handle multiple loans, while others struggle with just one or two. It all depends on your income, expenses, and personal circumstances.
Warning Signs You May Have Too Many Loans
Pay attention to these red flags that suggest you might be overextended:
- Loan repayments consume 30–40% or more of your income
- You’re relying on new credit to repay old debts
- You’re struggling with regular living expenses after making loan repayments
- You’re constantly thinking about money and feeling stressed
- You’re missing payments or only making minimum repayments
Why Lenders Might Say No
Even if you’re technically able to make all your repayments, lenders might still decline your application. Why? Because multiple loans equal higher risk. If something unexpected happens, you might struggle to keep up with all those repayments. Lenders need to consider not just your current situation, but potential future challenges too.
Can I Have Multiple Personal Loans at the Same Time?
Yes, you can have two or more personal loans at the same time. There’s no law preventing you from having multiple personal loans simultaneously.
How Many Personal Loans Can I Have at Once?
While there’s no legal limit to how many personal loans you can have, practical limits exist based on your financial capacity. Most people find managing more than 2–3 personal loans challenging, both financially and administratively. Each additional loan means:
- Another repayment date to remember
- More of your income is committed to repayments
- Less flexibility in your budget
- Higher total interest costs
Common Reasons a Loan Might Be Declined
Understanding why loans get declined can help you improve your chances. Here are the most common reasons:
- Income doesn’t support the additional repayment
- Too many recent credit applications (shows desperation to lenders)
- Poor credit history or defaults
- Incomplete or inaccurate application information
- Unstable employment or irregular income
- Existing debt levels are already too high
- Unable to verify income or expenses
What To Do if You Already Have Multiple Loans
If you’re currently managing several loans and feeling the pressure, you have options. Taking action now can prevent bigger problems down the track.
Review Your Finances
List all your loans, their repayment amounts, interest rates, and remaining terms. Sometimes just seeing everything written down helps you identify opportunities to improve your situation. You might discover you’re paying for services you don’t use or find areas where you can cut back temporarily.
Talk to Lenders About Hardship
If you’re struggling, reach out to your lenders immediately. Australian lenders have hardship teams specifically trained to help customers in difficulty. They can offer:
- Payment holidays or reduced payments
- Extended loan terms to lower monthly repayments
- Debt consolidation options
The key is to contact them before you miss payments, not after.
Explore Alternatives
Before taking on another loan, consider other options:
- Can you sell items you no longer need?
- Could family or friends help temporarily?
- Are there community support services available?
How to Avoid “Too Many Loans” in the First Place
Prevention is always better than cure when it comes to debt. Here’s how to borrow responsibly.
Before taking any loan:
- Calculate the true cost, including all fees and interest
- Consider if you really need it or if you can save for it instead
- Shop around for the best rates and terms
- Read the contract thoroughly – know what you’re signing
Build financial resilience:
- Start an emergency fund, even if it’s just $20 a week
- Track your spending to identify where money goes
- Avoid impulse borrowing – sleep on it first
- Consider one larger loan instead of multiple smaller ones
How City Finance Can Support You
At City Finance, we understand that life doesn’t always go to plan. Car repairs, medical bills, and urgent expenses don’t wait for perfect timing. That’s why we look at more than just your credit score when assessing your application.
We specialise in providing flexible, personalised lending solutions for everyday Australians who might have been rejected by traditional banks. Whether you’re on Centrelink benefits, have existing debts, or have experienced financial difficulties in the past, we take the time to understand your unique situation.
Ready to Take the Next Step?
If you’re worried about your existing loans affecting a new application, or if you’ve been turned down elsewhere, don’t give up. Every lender is different, and what matters to one might not matter to another.
At City Finance, we believe everyone deserves a fair go, regardless of how many loans you can have or currently have. Remember, you’re not alone in this.
Contact City Finance today to explore how we can support you on your journey. Sometimes, the solution is simpler than you think.
Start your application today and see how simple getting approved for a fast cash loan or short term loan can be.
