Can You Have Two Car Loans at the Same Time?

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Can you have two car loans at the same time? In short, yes. Although it will be more difficult to get approved and your interest rates might be quite high, it is possible to get approved for more than one car loan. 
Depending on your family’s needs, you might find yourself in need of more than one car. Applying for a single car loan is a fairly straightforward process—but what about when you need to finance two vehicles at the same time?
The car insurance comparison app Jerry has put together this guide for taking out multiple auto loans at the same time. Speaking of car insurance, when you add your second car to your insurance policy, your rates will likely change. Make sure you’re getting the most affordable price on the coverage you need by using Jerry.
Now that you know your insurance will be under control, here’s what you should know about getting two car loans.

When can you have two car loans at once?

There are generally two scenarios in which you would need to have two car loans at once:
  • You need to purchase two cars at the same time 
  • You need to buy a second car before you’ve finished paying the loan on your first car
Taking out two car loans at the same time might be your only option depending on your personal circumstances and your family’s needs.
Although the loan approval process tends to be more difficult when there are two cars that need financing, it is possible to receive two auto loans at the same time.

How do you get approved?

Approval tends to be more difficult on a second car loan. This is a big financial undertaking, so lenders want to be sure that you can afford the commitment.
Lenders look at a number of personal and financial details listed on your application, but here are the biggest factors that affect your chances of approval and the interest rates you will receive.

Credit history

Lenders will look at your credit score, as well as other loans you’ve taken out and your repayment history. They analyze your creditworthiness before agreeing to take on the risk of financing your vehicle.
If you already have an auto loan and you’re applying for a second one, lenders will want to see that you’ve been making your monthly payments on time and in full. Missed or late payments will heavily reduce your chances of loan approval.


It’s important that lenders feel confident in your ability to repay a loan. When you apply, you will be asked to submit details about your employment history and monthly income
A bank, credit union, or other financial institution will want to see proof that you can afford two monthly payments, plus the costs of gas, maintenance, car insurance, and other expenses for both vehicles.

Debt-to-income ratio (DTI)

When you apply for an auto loan, the financial institution will want to know how much of your monthly earnings are devoted to paying off debts. When you provide your financial information, the lender will come up with a DTI percentage—and this will affect your chances of approval.
To get approved for an auto loan, you’ll need a DTI ratio under 43%. The lower the ratio, the better your chances.

Down payment

Car dealerships expect that you will pay some portion of the vehicle’s cost upfront, even when you are paying for most of the purchase with a loan. If you pay more than the minimum required down payment amount, you could improve your chances of loan approval, since this helps minimize the lender’s overall financial risk.
Key Takeaway The strongest auto loan applicants have a high credit score, a stellar credit history, and a low debt-to-income ratio. Saving up for a large down payment on a vehicle will also increase your chances of approval. 
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Questions to consider before applying

Taking out an auto loan is a major financial responsibility, so you need to give it a lot of thought before applying for two simultaneous loans. Before submitting an application, here are some questions to consider.

Do you really need a loan?

A second auto loan burdens you with additional monthly payments, interest rates, and the potential to damage your credit history. If possible, you might be better off finding an inexpensive used car and paying with cash.

Is your credit report accurate?

Your credit history plays a major role in your loan application. Before applying for a second car loan, it’s a good idea to order a credit report for yourself to double-check its accuracy.
If you identify any errors, you can initiate a dispute with the corresponding credit bureau. Those investigations can take time, so be sure to request your credit report well before you plan on applying for a loan, if possible.
Pro Tip You are legally entitled to a free copy of your credit report every year from each of the three major credit bureaus: Equifax, Experian, and TransUnion.

Will you be applying for any other loans in the near future?

Anytime you apply for a loan, the lender will pull a hard credit check, which will cause your credit score to lower temporarily. Your score should return to normal if you make your loan payments on time and in full—but it won’t reverse right away.
It may not be a great time to take out a car loan if you are planning on applying for an additional loan, like a mortgage, soon.

Is this car primarily for your own use?

When you apply for a second car loan, you need to be transparent with the lender about the car’s intended use. It’s illegal to buy a car for someone else using a loan in your own name, although there are exceptions if you are buying for a relative. Be sure to discuss the situation with your lender. 
If you plan on giving the vehicle as a gift, you might need to cosign a loan with the intended recipient of the car instead of taking out a loan on your own.

Can you pay for both cars with a single loan?

If you’re shopping for two cars at the same time, some lenders will give you the option of taking out one loan for both vehicles. This will simplify your monthly payments and likely leave you with more desirable interest rates. Be sure to ask lenders if you are eligible for this option.
Similarly, if you’re shopping at a dealership, be sure to mention that you want to purchase two cars. It’s in the dealer’s best interest to secure both sales, so they may be more willing to negotiate a lower price on both vehicles.

Are you getting the best rate on your loan?

Each lender has different eligibility requirements, loan terms, and interest rates. Be sure to do your research and compare quotes from multiple banks, credit unions, and dealerships to find the best loan option for you.
Before you apply, talk to the lender to confirm your eligibility.

Finding affordable car insurance

Whenever you make changes to your car insurance policy—like adding a second vehicle—your insurance rates may change. Make sure you’re getting the best deal on the coverage you need by shopping for insurance quotes for free with Jerry.
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Different lenders have different requirements, but you are more likely to be approved for a loan with reasonable interest rates if your credit score is at least 700. Keep in mind, though, that the range differs depending on the credit bureau and the lender, among other factors.
Pre-approval is a possibility, although not all lenders offer this option. Be sure to shop around. Getting pre-approved will give you more negotiating power and make the car shopping experience go more smoothly.
Add up all your monthly bills, then divide by your gross monthly income (before taxes). Multiply this number by 100 to get the percentage. Lenders prefer applicants who have lower debt-to-income ratios because this represents a lower risk.

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