How Many Car Loans Can One Person Have?

Find out the factors affecting how many car loans a person can have at one time in Savvy’s comprehensive guide.

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, updated on August 10th, 2023       

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Taking out a car loan is a common way to manage the cost of your vehicle purchase more comfortably across an extended period. However, if you’re looking to buy another car and are still paying off a loan for the first one, can you apply for a second car loan? You can learn about how many car loans you may be able to take out at any one time and the factors impacting your approval chances right here in Savvy’s comprehensive guide!

How many car loans can I have at one time?

There’s no specific limit set on the number of car loans you can have at any one time. It’ll ultimately depend on various factors, including your financial stability, credit history, and lender policies. Essentially, you can have as many loans as you can reasonably afford and lenders are comfortable approving you for.

Lenders assess your ability to manage debt based on your income, expenses and existing obligations. If you have a strong financial profile, stable income and a healthy credit history, you may be eligible for another car loan on top of what you’re paying off already. However, it's essential to consider the potential impact on your overall financial health and debt load. Conversely, higher levels of debt will reduce the likelihood you’re approved for another loan.

Before considering multiple car loans, evaluate your financial situation thoroughly. Assess your budget, calculate the total monthly obligations and ensure you can comfortably manage the payments. Research and compare lenders to help you secure the most competitive interest rate and terms available, which you can do with Savvy today.

It's worth considering your circumstances closely to help you determine how multiple car loans align with your long-term financial goals. Responsible borrowing and maintaining a strong credit score will increase your chances of managing multiple car loans effectively and maintaining your overall financial well-being.

What factors affect my chances of approval for a second car loan?

Several factors can influence your approval for a second car loan, including the following:

  • Repayment history: lenders assess your credit and repayment history to help determine your borrowing behaviour. A strong history of timely payments on current or past car loans increases your chances of approval, while a history of missed payments or high debts could lower your approval odds.
  • Income and debt-to-income ratio: lenders evaluate your income to ensure you can comfortably handle the additional loan. Your debt-to-income ratio, which compares your monthly debt payments to your income, should be within an acceptable range.
  • Employment stability: a stable job history demonstrates your ability to generate income consistently, which reassures lenders about your repayment capability. If you’ve recently changed jobs or have done so consistently since your last car loan approval, this may hamper your chances of a second approval.
  • Lender policies: different lenders have varying policies on, and approaches to, multiple loans. Some may have stricter criteria for approving a second loan, while others might be more lenient.

Should I apply for multiple car loans at the same time?

Applying for multiple loans at once generally isn’t advisable. This is because several applications in quick succession can show up on your credit report, which can not only impact your credit score in some cases but also reduce the likelihood of approval with lenders.

When you formally apply for a car loan, a lender will conduct a hard credit check or inquiry. This allows them to obtain information about your profile and credit history when assessing your application. A hard credit check will remain on your file for two years and can affect your credit score.

If you want to shop around with different lenders, it’s worth seeking out lenders who offer pre-approval instead, which comes with a soft credit check. Unlike hard credit checks, these don’t appear on your credit file and don’t impact your score. Because of this, if you’re looking to shop around, it may be best to limit the number of hard checks for the sake of your approval chances.

Can I still get a car loan if I have bad credit?

There are many specialist lenders operating in the Australian market who offer car loans to borrowers with bad credit, so there may still be options available to you if you find yourself in this boat. These loans typically come with additional conditions attached, such as lower maximum loan amounts, higher interest rates and fees and, in some cases, greater deposit requirements.

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