There are no restrictions on having multiple car loans. You can have two car loans at the same time, as long as youâve been approved for them on the basis of your credit, income and other factors.
You can have two car loans. As long as youre legitimately approved for them, there is no limit to the number of car loans you can have. However, lenders can deny additional loans if factors such as your credit score or debt-to-income ratio (DTI) dont fit their requirements.
There are steps you can take, such as paying down other debts, that could increase the likelihood a lender will approve you for a second car loan. Adding another car payment will require carefully assessing whether it fits into your budget based on your current income and expenses.
Having two car loans at the same time may seem like a risky financial move. But in many cases, it can work out if you plan carefully. This article will explain when and how getting a second auto loan while paying off the first is possible
When Does It Make Sense to Have 2 Auto Loans?
There are a few situations where having two car loans concurrently could be reasonable:
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You have two working adults in the household. If both you and your partner need vehicles for commuting to jobs, two loans may be necessary.
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You operate a business requiring multiple vehicles. People who flip cars, run landscaping companies, or have other businesses needing several cars/trucks may require two auto loans.
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You own two homes in different locations. For instance, you may have a primary home and a vacation property in another state. It can be convenient to keep a vehicle at each place.
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You’re helping a teen or college student Providing a car for a high school or college-bound child often means financing another vehicle
In cases like these, the benefits of having two cars can outweigh the extra costs of double car payments. But it’s smart to consider the financial impact first.
How Lenders Evaluate Applications for 2nd Car Loans
Getting approved for a second auto loan involves more scrutiny from lenders. They want to limit risk, so you’ll have to prove your finances can handle two car payments. Lenders evaluate:
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Credit scores and history: Good credit is key. Ideal FICO scores are above 660. On-time payments on your first loan help too.
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Debt-to-income ratio: Lenders look at your total monthly debts versus income. Taking on another car payment can worsen this ratio, so improving it by paying down debts beforehand helps.
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Annual income: You’ll need enough income to cover both loan payments and other ownership costs like insurance and maintenance.
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New vehicle’s value: Less expensive cars present less risk to lenders.
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Down payment: At least 20% down shows lenders you’re invested in paying off the loan.
Tips for Getting Approved for 2 Auto Loans
If you’ve determined a second car loan makes sense, here are tips to boost your chances of approval:
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Pay down existing debts to lower your debt-to-income ratio.
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Maintain excellent credit by never missing payments and correcting errors on your credit report.
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Provide a large down payment, ideally 20% or more of the second vehicle’s value.
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Add a cosigner with good credit and income if you might not qualify solo.
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Compare rates on personal loans as an alternative financing option if you’re denied a traditional auto loan.
Should You Buy Both Cars at Once?
Purchasing two cars simultaneously can make sense in some cases. Benefits include:
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Potentially better negotiating leverage, especially if buying from one dealership
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Only needing one loan for the combined vehicle costs
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Possibly securing a lower interest rate on the consolidated loan amount
Just ensure you get preapproved first and your finances can handle buying two cars at the same time before moving forward.
Maintaining Multiple Car Loans
If you are approved for two concurrent auto loans, staying on top of the payments is essential. You’ll also have to budget for higher insurance, fuel, and maintenance costs.
Here are some tips for managing two car loans smoothly:
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Make payments on time every month for both loans to avoid damage to your credit. Setting up autopay can help.
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Build up your emergency savings to cover unanticipated repairs or expenses.
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Understand depreciation. Cars lose value over time, so factor this into any long-term budgeting.
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Consider resale value. Selling or trading one car in could help pay for a replacement vehicle in the future.
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Stay organized. Track maintenance schedules, insurance, registrations, etc. for both vehicles.
When Does It Not Make Sense to Have 2 Auto Loans?
In certain situations, taking out a second car loan would be extremely risky and inadvisable:
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If you have bad credit or a debt-to-income ratio that’s already too high
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If you cannot afford the combined monthly payments, insurance, etc.
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If you do not actually need two cars (for instance, just wanting a second for fun)
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If you take out two loans on the same vehicle instead of two separate cars
In cases like these, avoid obtaining a second auto loan until you improve your financial standing. Focus on paying off your existing car first before adding another.
The Bottom Line
Having two auto loans at once is possible with careful planning, strong credit, and ample income. But proceed with caution, as it represents a major financial commitment. First weigh whether you genuinely need two cars. If the benefits outweigh the costs for your situation, follow the guidance above to responsibly take on two car payments.
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How Many Car Loans Can You Have?
There is no universal limit to the number of car loans you can have in your name. The only restrictions are whether lenders approve you for a new loan, and whether you can afford it.
For example, if youve missed a car loan payment in the past, that will hurt your credit and impact whether youll qualify for a second car loan. Even if youre approved, a lower credit scoreâor a higher DTI, since you currently have other debtâcould mean paying a higher annual percentage rate (APR) or getting approved for a lower loan amount than you need.
On the other hand, if you have a good credit score and earn enough income to comfortably manage the payments, you may be easily approved for a second car loan.
Can You Get a Deal Buying Two Cars at Once?
FAQ
Can I get another car loan if I already have one?
Does having two car loans hurt your credit?
How much is a $30,000 car payment for 60 months?
What is the 20/4-10 rule for buying a car?
The 20/4/10 rule is a guideline for car buying that suggests a responsible approach to financing.
Do you have two auto loans at the same time?
Americans love their cars, trucks, and SUVs. Some love them so much they’ll own two vehicles at the same time — and often make payments on two auto loans at the same time as a result. But having two auto loans can really add up.
Can you buy 2 cars at the same time?
In most cases, you’ll pursue a traditional auto loan for each car you buy. These loans are separate for each vehicle, whether you buy 2 cars at once or one after another. The loan will consider your financial standing and DTI, so getting approved for a second loan might be challenging. Co-signers or co-borrowers.
Can you finance two cars at once?
While financing two cars at once is possible, it can be extremely expensive. Before you take out a second auto loan, it’s important to weigh the pros and cons, and make sure your current financial situation can support more than one loan.
Can you buy two cars with a single car loan?
Even if you find a lender who will green-light two auto loans for a single vehicle, that path leads to significantly higher debt, more potential damage to your credit score, and higher monthly auto payments. If you’re interested in owning two vehicles or more with multiple car loans, here are some factors to consider:
Can you have more than one car loan payment?
When you have more than one loan payment, it increases the likelihood that you’ll miss a payment or default on the loan. Providing more than one loan at a time is very risky for lenders. If you’re thinking about financing two cars on the same auto loan, that’s probably not an option.
Can I get a second car loan?
Auto lenders and banks will typically give extra scrutiny to current auto loan borrowers seeking a second car loan. The hurdles to a second loan may include the following: Your credit history. Personal credit remains the primary barometer for auto lenders deciding whether or not to approve a second car loan.