Can I still get a car loan if I have $10,000 in credit card debt?

I want to get a car loan, but I still have $10,000 in credit card debt. Can I get a loan? Or do I need to pay down my credit card debt first?

Answer
Credit card, or revolving, debt is one of the most common types of debt, so know you’re not alone! If you have good credit and income, you may be able to secure a car loan, even if you have $10,000 in credit card debt.
The real issue is your debt-to-income ratio. A debt-to-income ratio compares your monthly minimum debt payments against your monthly income. If this is more than 43%, you’re going to have a tough time finding a lender to work with you. Moreover, the lenders that might work with you will also charge you a much higher interest rate.
If you’re below this 43% threshold, you can probably get a car loan. That said, you’ll still want to pay off as much of your credit card debt as possible. Car loans often come with a low APR compared to credit cards. Therefore, you should always pay off high-interest debt before anything else.
Don’t forget you’ll also need full coverage car insurance as part of your agreement with your lender. Because full coverage can get expensive, you should always shop around. Hop on the Jerry app to compare rates from 50+ insurance providers and find the best full coverage insurance for your new car. The average Jerry user saves $879 a year!
Eric Schad
Answered on Dec 10, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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