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Having two cars isn't abnormal for most families, but two car loans can put a strain on your finances. Before you apply, make sure you can afford it — and that you can prove it to your lender.
You can have two car loans at one time, but it may be more difficult to qualify for a second loan. Lenders only approve you if your income and debt can handle the added monthly expense.
And even if you are approved, you need good to excellent credit to score a low APR. Without that, you may face higher rates and a lower total loan amount — which limits how much car you can afford.
It depends on your finances. Like any loan, applying for a second car loan will result in a hard credit check, which can temporarily lower your credit score.
A second car loan will also increase your debt-to-income ratio, which may make it more difficult to improve your credit after you buy your car. Future lenders may be more unlikely to offer you a good rate, and the added monthly cost could make it more difficult to budget for other regular expenses.
However, if you already have excellent credit, limited debt and a strong income, a second car loan may not have as big of an impact. With that said, you should still consider your options carefully and understand the full impact two car loans could have on your financial profile.
You may be able to, but it's not recommended. Borrowing two car loans for one car will only increase the amount of debt you have and make it more difficult to afford monthly repayments. Instead, consider financing a less expensive car or saving for a down payment to reduce the amount you have to borrow.
Four factors typically play a large role when you apply for a second car loan:
Lenders view your application with more scrutiny if you already have a car loan. To help increase your chance of scoring a second car loan, use these tips:
At the end of the day, there isn't much to a second car loan. Provided you understand the expense of owning a car, it works like any other loan. To get the best deal, compare your car loan options before applying with a lender.
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