Personal loans aren’t a one-and-done deal. There is no limit on how many personal loans borrowers can hold. You can hold multiple personal loans at the same time as long as you meet the eligibility requirements and uphold your end of your loan agreement.

The catch: Adding multiple debt payments to your monthly budget can make it more difficult to repay your loans and cover your day-to-day expenses.

To figure out how many personal loans you should have, it’s important to take stock of your finances and existing debts.

How personal loans work and what to consider when borrowing

A personal loan is a type of loan that can be used for many different purposes. Unlike a business loan, mortgage, or auto loan, you can use your loan to cover the cost of several different expenses like a medical emergency, costly home repair, or debt consolidation.

Like any other form of debt, a personal loan comes with its own repayment terms and conditions. As such, it’s important to consider how these payments will fit into your budget to ensure that you can comfortably afford to repay your loan.

What’s more — each time you apply for a new loan, you’re subjecting yourself to a hard inquiry, which could ding your credit score. And, the more debt you carry, the greater your debt-to-income ratio (DTI).

Your DTI tells lenders how much debt you’re currently carrying in proportion to your income and whether or not you can realistically afford to tack on an additional loan payment.

What do lenders consider before approving you for a new personal loan?

There are certain factors your lender may consider when deciding whether or not to approve you for a personal loan, which could impact the number of loans you’re able to take on. This may include:

Creditworthiness

Like any other form of debt, your credit history and credit score help paint a picture for your lender about the type of borrower you are. It tells them how you’ve managed debt in the past, what kind of debt you’ve carried, and how likely you are to make on-time payments.

Before you apply for a new loan, take some time to comb through your credit report and figure out how a new loan may land with a potential lender.

Good credit doesn’t only work in your favor during the loan application and approval process, it may entice your lender to offer you more favorable terms like a lower interest rate.

Debt-to-income ratio

Generally, lenders look for a DTI of 36% or less. This means that all your debt obligations do not account for more than 36% of your gross monthly income. This isn’t a hard and fast rule — your lender may have different criteria that push this percentage a bit higher or lower than the norm. However, a lower DTI typically bodes well for borrowers hoping for speedy approval.

If you have too many personal loans, you may have already hit this threshold. Crunch the numbers to see how much of your monthly income is being spent on debt payments to figure out if you’re already there.

Your lender’s policies and restrictions

Your lender may have specific policies in place regarding the number of personal loans you can borrow from them at a time. Keeping all of your personal loans under one roof can certainly simplify repayment, but if you’ve hit your lender’s max, you could shop around to see if you qualify for a personal loan through a different lender.

A new lender may not take issue with multiple personal loans on your file as long as you’re making on-time payments and your income shows them that you’re capable of taking on another payment.

Determining whether you should have multiple personal loans

Before you take on a new personal loan and undergo a hard credit check, you should think carefully about how much debt you can comfortably afford to take on and whether a new loan will simplify or complicate your personal finances.

Do your financial goals warrant more than one personal loan?

What will you use these personal loans for? Can you postpone this goal and save up for it in a high-yield savings account or certificate of deposit (CD) so that you don’t have to borrow money?

Say you want to renovate part of your home, but it’s more of a “want” than a need,” you could save money in interest over time by adjusting your timeline and savings strategy.

On the other hand, if you’re borrowing a low-interest personal loan to wipe out high-interest credit card or student loan debt, you could save more money over time and even consolidate your payments to simplify repayment.

What personal loan interest rates and loan terms are you being offered?

Personal loan interest rates vary across lenders and loan products.

When considering a personal loan, you should compare loan offers to find the best personal loan rate. The same can be said for the terms of the loan. Consider whether you’re capable of repaying your loan within the given time frame or if it would put too much strain on your bank account.

If the offers you’re receiving aren’t the most competitive, it may be time to take a step back and try to figure out what could be giving your potential lender(s) pause. Perhaps you have too much existing debt for their liking or you have “bad credit.” If that’s the case, consider hitting the pause button on getting a new loan and work toward getting your credit back in good standing and reducing your old debt balances.

How will an additional monthly debt payment impact your finances?

You can expect that new debt will impact how much you can spend each month, the amount you can allocate toward your savings and future goals, and your ability to repay other debt obligations.

Before assuming new debt, you should weigh the pros and cons of taking on an additional personal loan and make the decision that best suits your short-term needs and your long-term goals.