Can You Finance More Than One Car at Once?

Many families need more than one car. In some cases, you might find yourself buying multiple cars back to back—or even at the same time. If you’ll need financing to do so, you might be wondering: Is it possible to finance more than one car? 

The short answer is yes! There is no official limit to the number of car loans you can take out. However, there are some considerations to make before you secure financing. It takes careful preparation and budgeting to be approved for and pay off multiple car loans at once.

Factors That Can Impact Approval for a Second Car Loan

Perhaps you’re buying a second car for practical purposes, or you need a vehicle for your business. No matter what it’s for, you’ll need to consider whether financing 2 cars makes sense for your financial situation. Lenders will look closely at your credit history and debt landscape to determine whether you can truly afford multiple auto loans. 

These factors will play a role in your ability to finance a second car.

Income and budget

Before applying for a car loan, ask yourself if you can afford another vehicle. The best way to answer this question is to look closely at your overall financial health. Calculate your income, expenses and any existing debt, including your first car’s financing. 

Then, use an auto loan calculator to see what your second auto loan could look like. Can you comfortably add this loan to your budget? Make sure you also factor in insurance, fuel, maintenance and unexpected repairs for the new car.

Credit history

Good credit is essential if you plan to take out multiple auto loans. Your credit history plays a significant role in determining whether you’re eligible for vehicle financing. Lenders look at your credit score and payment history to evaluate your risk as a borrower. 

A strong credit history could lead to more favorable loan terms—and loan approval in the first place. A lower credit score might result in higher interest rates or even loan denial. 

Debt-to-income ratio

Before approving a loan, lenders look at your DTI (debt-to-income) ratio. This ratio shows how much of your monthly income goes toward debt. You want to maintain a low DTI ratio to comfortably manage your finances.

Taking out another car loan will increase your monthly obligations. In some cases, this might push your DTI ratio too high to be approved for a loan at all. Work on paying off other debt before applying for a second auto loan to increase your chances of approval.

Financial Considerations for Multiple Vehicles

Owning multiple vehicles can open up possibilities in your life—and, in some cases, it’s simply necessary. However, it also comes with its own set of financial considerations and challenges. Make sure you keep these things in mind if you’re planning to finance a second vehicle. 

• Costs. Financing, insuring and maintaining multiple vehicles can impact your monthly budget. Before you buy, understand how the extra expenses affect your financial stability. 
• Depreciation. Cars depreciate—or lose value—over time. Owning multiple cars means managing the potential depreciation of each one. Understand how depreciation works and factor it into your long-term financial plans.
• Resale value. Consider how your vehicles’ resale values might affect you in the future. Reselling or trading in one vehicle can potentially help fund a new purchase or reduce financial strain.
• Flexibility. While owning multiple vehicles provides flexibility, it also requires more organization and time management. You’ll need to keep track of maintenance schedules, insurance payments and other details for each vehicle.
• Emergency fund. Having an emergency fund becomes even more important when you own multiple vehicles. Unforeseen repairs or accidents could strain your finances. You’ll want to have a financial cushion to fall back on, so start saving as early as possible.

Financing Options for Multiple Cars 

If you’ve assessed your financial situation and believe you can manage the costs, it’s time to look into financing. You may have a few auto loan options if you’re financing more than one car.

• Traditional auto loans. In most cases, you’ll pursue a traditional auto loan for each car you buy. These loans are separate for each vehicle, whether you buy 2 cars at once or one after another. The loan will consider your financial standing and DTI, so getting approved for a second loan might be challenging. 
• Co-signers or co-borrowers. If you’re finding it difficult to secure financing for a second vehicle, consider finding a co-signer or co-borrower with a strong credit history. Their involvement can increase your chances of approval and potentially lead to more favorable loan terms on approval.

Your next car is within reach.

With careful planning, responsible financial management and a clear understanding of the challenges, you can finance multiple vehicles. Each car adds to your financial responsibilities, so make informed decisions that align with your long-term goals. 

If you’re preparing to finance a new vehicle, Navy Federal Credit Union can help! Apply for an auto loan preapproval and we’ll be with you every step of the way.