Will having several loans cost me more?

2 min read

Multiple feesEach has set-up cost

Rate can riseExisting debt seen

Affordability tighterEach counts against next

Purpose-fit can helpRight tool per need

The extra costs of multiple facilities

Each loan carries its own set-up cost — an arrangement fee, possibly documentation and servicing fees — so running several means paying those costs several times. On top, each new lender sees your existing commitments, which reduces your affordability headroom and can push the rate on the next facility up. More debt on the books generally means the next pound is priced higher.

When several still makes sense

That said, multiple facilities are not automatically wasteful. Matching the right product to each need — asset finance for equipment, invoice finance for the ledger, a facility for gaps — can be more efficient than forcing everything through one general loan, because each product is priced for its purpose. The question is whether the fit benefit outweighs the duplicated fees and tighter affordability.

Keeping the total cost down

Watch two things. First, do not accumulate facilities without tracking the combined cost and the strain on affordability — several small debts can quietly add up to an expensive, hard-to-manage whole. Second, if you find yourself juggling multiple loans mainly for admin reasons, consolidation may cut both the cost and the complexity. Compare the combined total against a single facility. See whether existing debt raises your rate.

Model the combined cost on the true cost calculator, and if consolidating, get a quote.

Frequently asked questions

Is it cheaper to have one loan or several?

One loan avoids paying multiple sets of set-up fees and keeps affordability simpler, so for a single general need it is usually cheaper. Several purpose-fit facilities can be efficient when each product is genuinely better suited to its job than a general loan would be. Compare the combined total cost of the multiple approach against a single facility to see which wins for your situation.

Does each extra loan make the next one more expensive?

It can — every existing commitment reduces your affordability headroom and is visible to the next lender, which may price in the added risk with a higher rate or a tighter limit. It is not guaranteed, and a strong, cash-generative business can carry several facilities comfortably. But in general, more debt on the books tends to make the next pound of borrowing dearer.