Can You Have Two Car Loans At Once?

, can you have two car loans at once

When purchasing a car, the process is somewhat daunting. Although for the most part, it’s fairly simple. That is, as long as you have decent credit. First, you find a vehicle that suits you and your monthly budget. Then, after settling on a price and putting some money down and/or trading in another vehicle, you’ll sign off on a loan. This will likely be at the dealer’s. Then you’ll drive your new-to-you car right off the lot.  But, what if you’re buying two cars at once? How about if you’re buying another care before your other vehicle loan is paid off? Can you have two car loans at once?

Can You Have Two Car Loans at Once?

You may find yourself in a situation, particularly with your husband or wife, where you may need to have two car loans out at the same time. Whatever the circumstances, the answer is typical of most finance questions: it depends.

As with any loan, what will determine your approval comes down to a number of factors; mainly, your credit. Let’s break them down.

Getting Approved for Two Car Loans

There are a few key factors that will be considered for multiple loans. They are as follows:

Credit History

Not surprisingly, one of the first things a banker or lender will look at will be your credit history. They will obtain and review your information, which will include your credit score, repayment history, other loans on file, and so on.

This will be one of the main elements in determining your approval for another car loan. Even though the bank approved the first loan does not mean this second will go just as smoothly.

Proof of Income

In addition to credit history, those loaning you the money will want to see a proof of income, for obvious reasons. This shows them not only that you have money coming in regularly, but it provides an idea of how capable you are of repaying such debt.

Other Factors

Other factors that banks look at when you apply for a second car loan may also include your debt to income ratio. If your debt ratio is 50% or more, you may have trouble getting approved for a loan. This is true even if you have a decent salary. Writer and real estate investor Michael Bluejay notes on his website that each bank differs. But in generous cases, your bank may permit you to have a 42% debt ratio. You can find out how to calculate your income to debt ratio here.

Keep In Mind

Be aware of the “straw” purchase. A “straw” purchase is basically when you buy a car for someone else, but put the loan under your name. This is considered bank fraud, and thus, it’s illegal. One reason is because a car is collateral. If you are trying to purchase a vehicle for a loved one, you should sign as a co-signer or give them cash to put toward their purchase. They are not able to own the car if the loan is under your name. However, if the individual is your dependent, then it is a different case.

Think about why you need the car. Reconsider the loan to save on interest if you are able to pay straight cash. If you plan to only use the additional vehicle as shuttle only or for limited driving, it may not be worth taking out a loan.

The Effects of Having Two Car Loans

Taking on two car loans at the same time is a huge financial responsibility. Not only will you have the additional payment each month, but it will also affect your credit. Chances are that your credit score will take a hit and temporarily lower after you take out the loans. Furthermore, you will also have a higher debt-to-income ratio. This will make it more difficult to obtain good rates from future lenders. It will also make it difficult to improve your credit score with such a heavy financial responsibility.

There is some good news for those with good credit, limited debt, or a strong income. While a second loan may not impact your situation much, it is still wise to think through all your options before signing anything.


So, can you have two car loans at once? Yes, but not without requirements. Cases and circumstances do vary. You might want to make sure you would even qualify for a second loan by speaking with a few lenders before picking out that next car. You’ll also want to review what new interest rates you could have as they might be higher depending on your current loan status.

Have you ever had to take out more than one car loan at the same time? Share your experience in the comments below!

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One thought on “Can You Have Two Car Loans At Once?

  1. yes, I have taken a car loan for my friend because he was not eligible to apply for a car loan, but later I also needed a car for myself so at that time I applied for my second car loan. Because my Credit history and monthly Income was good therefore I got the loan easily.

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