Can You Have Two Car Loans At Once?
Just as you can have two credit cards at the same time, you can have two car loans at once. However, it is not as simple as signing the paper for a second loan. You do need to be approved and there will be a few factors considered prior to getting the thumbs up.
What Will Be Considered
Credit: Naturally, first and foremost, your credit will be reviewed as it would with any loan. Bankers or lenders will be looking at not just your credit score but your credit history as well. Also, despite being approved for one, you may be denied for the second. You may be able to pull out a CVS bad credit loan if your credit is bad.
Proof of Income: Lenders want to know you have a regular stream of money coming into your bank account. With your proof of income, they also want to be able to determine whether or not you will be able to make your additional monthly payments that would come with a second car loan.
Debt to Income Ratio: This is another big determining factor when it comes to getting approved for your loan. This report will show how strong your financial situation is and if you can handle another loan. You want to shoot for a debt to income ratio of lower than 50%, but this is a case by case basis and depends on the company reviewing your application.
What You Need to Know
In addition to knowing what you need to be considered, you also need to be aware of certain issues that may arise. Here are just a couple things to keep in mind:
Credit Score Issues: Taking out a second loan could temporarily hurt your credit score, as discussed in this forum on CreditKarma.com. The good news is that as long as you meet your balance payments on time, you should be able to quickly bounce back. This does depend on your current credit history though.
Legal Issues: Sometimes, we want to buy a vehicle as a gift for someone or to help out a loved one. While the gesture is nice, it may not be legal. If you buy the car for someone who is not a dependent, it is called a “straw purchase,” which is considered bank fraud. Even if the person you are buying for is capable of making the monthly loan payments, it poses a problem for the lender because they have been led to believe you, who has been approved for the loan, is the one that will be responsible. What you should do instead is sign on as the co-signer, if you really want to help someone out.
So, it is possible to have two car loans at once, but you do want to be cautious and make sure you are paying your balance on time as well as avoiding switching out the loan for another as that could hurt your credit. But, that is an article for another day.
Have you ever tried to take out two car loans at once? Share your experience below!