If you need to borrow money to buy a second car, you may wonder if you can afford to buy it outright or if it's possible to finance a car when you already have one outstanding car loan. In this article, we will talk about how to get a second loan.
If you have a car loan and want to get another one, most people will tell you it's impossible. But if the lender thinks you can handle making payments for two loans, they will probably give you another one. So, it's possible to have more than one car loan at a time.
The possibilities are endless when it comes to how many cars you can have on finance at one time. The number will depend entirely upon your individual circumstances, credit history, and what you can afford. It isn't unheard of for people who own two or three vehicles to have multiple loans in their name.
It is vital that lenders lend responsibly and ensure that borrowers don't take out loans they can't afford to repay or leave them with little money to pay for essentials.
There are several factors that lenders look at when evaluating your application. Here is what they consider in making a decision on whether or not to approve you.
Lenders use your credit history to help them decide if they should give you a loan. They look at things like your credit score and how you've paid back other loans. You will need a good credit rating and a regular income to qualify for a car loan – if you have a bad credit rating, we are afraid it will be almost will almost impossible to get approved for second finance. Just because you got approved for a loan in the past doesn't mean it will be as easy to get approved for a new one. But if you have good credit and a decent income, it shouldn't be hard to take out two cars on finance!
When you want to borrow money from a bank or other institution, they will want to see proof that you have income and that you will be able to can repay the loan. This is because they need to know that you won't default, meaning you don't pay it back. Most places will want to see if you have money coming in regularly and can afford to make the payments on the loan.
Other factors that banks take into consideration when you apply for a second car loan may include your debt to income ratio. If your debt ratio is 50% or higher, you may have difficulty getting approved for the loan. Even if you have a good salary, this can be the case. However, each bank differs in its requirements. In some cases, a bank may allow you to have a debt ratio of 42%.
Finance companies and lenders think that people who have two car loans are more likely to fail to make payments on one of them. They believe this because the person still has another car if they decide to stop paying for one of the loans. Therefore, these companies see people with two-car loans as a greater risk.
You should consider the timing of your second or third car finance agreement when applying. As you're taking on a large amount of debt, you might see your credit score decrease slightly when you obtain new finance. The credit score will rise quickly once you begin paying back your loan, but you may encounter difficulties when trying to secure another loan right away if your credit score has been affected.
In order to get a loan for two cars, you'll need to take the following steps:
Assuming you can swing the monthly payments, having two car loans at the same time isn't the worst idea. Your credit score will take a minor hit, but as long as you make your payments on time, your score should rebound in no time.
There are several things you can do to improve your chances of successfully securing additional financing. One is to set aside money for a deposit before making your application. This will reduce the size of your monthly payments and make everything look better to lenders.
Another thing you can do is stagger your applications so that finance companies don't frown upon multiple attempts.
If your credit rating is poor, you should rebuild it before applying for finance. This involves paying off any outstanding debts or setting up payment plans to repay any defaults.
It is possible to have two car loans at the same time, but there are some requirements that must be met. Each case and circumstance can vary.
If you have any questions about car finance or want to know if you're eligible for more than one loan, it is better to turn to experts such as Carplus. Give us a call and speak to one of our specialists. They'll be happy to help.