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. That being said, you can have as many car loans as you want as long as you are actually approved for them. But lenders can turn down more loans if your credit score or debt-to-income ratio (DTI) doesn’t meet their standards.
Some things you can do, like paying off other debts, might make it more likely that a lender will give you a second car loan. Before you add another car payment, you should carefully consider whether it fits into your budget based on how much money you already make and spend.
It might seem like a bad idea to have two car loans at the same time. However, if you plan well, it can often work out. You can get a second auto loan while paying off the first one. This article will explain when and how to do that.
When Does It Make Sense to Have 2 Auto Loans?
There are a few situations where having two car loans concurrently could be reasonable:
-
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.
-
You operate a business requiring multiple vehicles. People who buy and sell cars, run landscaping businesses, or run other businesses that need a lot of cars or trucks may need two auto loans.
-
You own two homes in different locations. One example is having a main home and a vacation home in different states. Having a car at every location can be useful.
-
You’re helping a teen or college student. Getting a child a car for high school or college usually means paying for another car.
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:
-
Credit scores and history: Good credit is key. Ideal FICO scores are above 660. On-time payments on your first loan help too.
-
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.
-
Annual income: You’ll need enough income to cover both loan payments and other ownership costs like insurance and maintenance.
-
New vehicle’s value: Less expensive cars present less risk to lenders.
-
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:
-
Pay down existing debts to lower your debt-to-income ratio.
-
Maintain excellent credit by never missing payments and correcting errors on your credit report.
-
Provide a large down payment, ideally 20% or more of the second vehicle’s value.
-
Add a cosigner with good credit and income if you might not qualify solo.
-
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:
-
Potentially better negotiating leverage, especially if buying from one dealership
-
Only needing one loan for the combined vehicle costs
-
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:
-
Make payments on time every month for both loans to avoid damage to your credit. Setting up autopay can help.
-
Build up your emergency savings to cover unanticipated repairs or expenses.
-
Understand depreciation. Cars lose value over time, so factor this into any long-term budgeting.
-
Consider resale value. Selling or trading one car in could help pay for a replacement vehicle in the future.
-
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:
-
If you have bad credit or a debt-to-income ratio that’s already too high
-
If you cannot afford the combined monthly payments, insurance, etc.
-
If you do not actually need two cars (for instance, just wanting a second for fun)
-
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.
Stop overpaying for insurance
Answer some questions about your current plan and get matched to personalized quotes.
Weâll show you offers from our top insurance carriers and help you shop for better rates in the future.
From switching your policy to canceling and requesting a partial refund on your old plan, we help you do it all.
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 instance, if you’ve ever missed a car loan payment, it will hurt your credit and make it harder for you to get a second car loan. If you get approved, you might have to pay a higher annual percentage rate (APR) or get a loan amount that is less than what you need if you have bad credit or a high DTI because you already have other debt.
But if you have good credit and make enough money to make the payments, you might be able to get a second car loan without much trouble.
Can You Get a Deal Buying Two Cars at Once?
FAQ
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. You should think about the pros and cons of getting a second auto loan before you do so. Also, make sure that you can afford 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?
If you have more than one loan payment, you’re more likely to miss one or not pay back the loan at all. 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.
Can I get another car loan if I already have one?
Yes, it is possible to get a second car loan even if you already have one. However, lenders will carefully assess your financial situation to determine if you can comfortably manage the payments for both loans.
Does having two car loans hurt your credit?
How much is a $30,000 car payment for 60 months?
A $30,000 car loan for 60 months will result in a monthly payment between $500 and $700, depending on the interest rate. For example, at a 5. 8% interest rate, the monthly payment would be around $520, according to Edmunds.
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.