39% of people living in America have no money in their savings account.
That means millions of people live paycheck to paycheck when it comes to paying for daily necessities. It also means that millions of people find themselves in trouble when adversity strikes.
Car repairs. Home fixes. Medical bills.
When unforeseen expenses crop up, people with no savings have limited options. How can they manage their newfound financial obligations?
Fortunately, there’s a difference between having no options and limited options. Cash loans have helped many people bridge hardships and find future balance in their financial lives.
As a matter of fact, cash loans are so helpful, some borrowers consider taking out more than one at a time.
But is taking out multiple loans a good idea? Is it legal? What are the benefits?
Below we explore cash loans, loan stacking, and ten of their balance-bringing benefits in-depth.
What Are Cash Loans?
Before we explore the viability of “loan stacking”, let’s define what constitutes a “cash loan”.
Cash loans often refer to “payday loans” which is a loan product where people borrow money against a future paycheck that they’re certain they’ll be receiving at the end of the month.
While less common, people also use the term “cash loan” to describe non-payday loan products like short-term personal loans.
As we dive into loan stacking, many of the concepts we discuss apply to both payday loans and short-term personal loans.
Cash You Take Out Multiple Loans at Once?
Taking out multiple loans, or loan stacking, is possible and legal in most states. Because you can take on multiple cash loans doesn’t mean should though. It also doesn’t mean that lenders will let you.
With each loan you take out, you represent an increased risk of defaulting to the organization funding your loan. Because of that, the odds of getting your second or third loan product approved after an initial approval is lower.
Do Lenders Know That You’re Loan Stacking?
Sometimes yes, sometimes no.
Any loan that requires a credit check to borrow will know immediately whether you’ve taken out a loan recently.
With no credit check products, the lender may ask you if you’ve recently taken out a loan. Your response when answering any questions posed during your application process should be 100% honest. You may face legal repercussions for deception or fraud if you lie while trying to get a loan.
Finally, in some cases, your lender won’t inquire about your loan history at all. It may be that they assume, due to your state’s legal obligations, that you’re not stacking loans or it may be that they don’t care.
How Can You Stack Cash Loans?
The process of stacking cash loans is as simple as the process of getting your initial one. You’d take out a loan from one lender, get approved, then repeat the process with a separate lender.
As we mentioned before, the approval process will likely be difficult (if not impossible) given that most lenders won’t want to be your second or third loan in a stack.
With that said, if a lender doesn’t ask or doesn’t mind you loan stacking, you may get approved for your other loan products.
What Are the Risks of Taking Out Multiple Cash Loans?
Loan stacking can be a necessity for some and may even give people the footing they need to get ahead of their finances and bring balance to their life. Still, a troubling amount of people stack loans at their demise.
Every time you apply for a loan that pulls a soft or hard credit check, your credit score will go down. This can hamper your future borrowing prospects.
Also, taking on different loans means taking on numerous fees and interest rates. If you’re having trouble paying for your day-to-day necessities, are you going to be able to afford paying down two loans at the same time?
Remember, defaulting on loans can destroy your credit. It can lead to third-party collection agencies harassing you and many other hardships.
Furthermore, certain states have legal ramifications if it can get proved that you are taking on loans with no intention of paying them back.
The bottom line is that if you need to take on multiple loans to get by, odds are that you need more help than a loan can provide.
Consider talking with a debt counselor or talking to city officials to see what support programs you may qualify for. You could receive reduced utility rates and help with food costs and housing expenses.
How Cash Loans and Loan Stacking Can Bring Balance To Your Life
Now that you understand what cash loans are, the process of getting them and the ramifications of stacking, we’ll share ten benefits that loans and stacking can offer people who are struggling.
When people need financial help, they need it quick. With a cash loan, personal loan, or other loan products, lenders are eager to facilitate borrower’s request for money.
2. Easy Qualification Process
There are some loans out there that will require a credit check or have similar hoops you’ll need to jump through. There are also loans that only require that you have provable income and a checking account to qualify.
That simplicity means the barrier to obtaining the money you need to balance your life is relatively low.
3. Information Security
Regarding payday loans, no matter how many you take on at once, your information is always secure. Federal guidelines prohibit payday loan providers, in most cases, from sharing your information with third party companies.
Most payday loans will ask that you pay your debt at the end of the month. Personal loan providers are more flexible when it comes to payback schedules.
That flexibility gives you the breathing room you need to get your finances in order. You won’t have to worry about paying down your debt immediately, so you can focus on improving your situation instead.
5. Legal Protections
The loan industry is finding itself under progressive scrutiny from legal officials. This scrutiny has led to caps on interest rates and fees that can get levied against you.
6. Loan Amounts
Whatever your financial needs are, chances are you can meet them through a single loan product or via taking on multiple loans. This is helpful to people who find themselves needing money fast.
7. Unrestricted Use
Cash loans almost never come with use contingencies. Once you get your money, you can apply them to whatever you need to get your life in order.
8. A Safeguard Against Emergencies
Despite many “financial guru’s” distaste for a variety of loan products, the truth is that millions of people rely on loans. Access to quick funds helps safeguard the things that they love in their lives.
Whether you need to pay a loved one’s medical bills or ensure they get to school on time by keeping your vehicle in good shape, loans are there to help you out.
9. Potentially Credit Building
Depending on the kind of cash loan you take on, if you pay it back in a timely manner, your credit will be better for it. The better your credit gets, the more flexibility you’ll have when it comes to borrowing in the future.
10. Debt Consolidation
If you owe money to many credit cards and loan products that carry unfavorable terms, you can save yourself money by taking out one or two cash loans to pay off those bad debt balances.
This process is debt consolidation. It can help simplify people’s financial lives by giving them better terms on their debt.
Wrapping Up Ways Multiple Cash Loans Can Help You Find Your Balance
As you can see from our list, there are many advantages cash loans can bring to people’s lives. Loans can help people get peace of mind, financial and life security. There are also many instances where loans, particularly if they’re stacked, can cause harm. They can damage people’s credit, hurt their finances, and even lead to legal trouble.
Our hope is that we’ve given you a clear depiction of loans and stacking so you can make an informed decision on what’s best for your unique financial needs.
Are you looking for a quality payday loan or short-term personal loan lender? Are you interested in getting the money you need as quickly as today?
If so, let our team at Bonsai Finance help you find the loan you’re looking for.
We offer sophisticated loan finding tools that help borrowers like you find third-party lenders.
Get the financial help you need now or keep learning about how to improve your financial situation in our learning center.