Can you have two car loans at once?
I am currently financing one vehicle and use it to commute to and from work every day. I’ve been thinking about purchasing a second vehicle just for enjoyment. Can I get a second car loan before the first is paid off?
Yes, you can have two car loans at once! While no legal restrictions prevent you from doing so, getting approved for the second car loan can be challenging.
The lender’s decision to approve you is heavily influenced by your credit score and debt-to-income ratio. If you have a poor credit score or your debt-to-income ratio is above 43%, lenders are unlikely to approve your application.
If you want to know where your debt-to-income ratio stands, simply divide your monthly debt obligations by your monthly pre-tax income. Your debt includes:
- Credit cards
- Other types of debt not included above
Some lenders may also ask for monthly bills that would go into this ratio, such as insurance, rent, etc.
If you get approved for a second car loan, remember to add the new car to your auto insurance policy and purchase comprehensive and collision coverage.
Lenders will always require full coverage car insurance on a financed vehicle, so budget accordingly.
If you want to compare car insurance quotes or have questions about your coverage, download the Jerry app. Jerry shops for low prices with over 50 different insurance companies for free. You can get quotes in seconds, make changes at any time, and get any answers to questions you may have. Jerry even helps you cancel your old policy!
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