Millions of American families today have multiple vehicles, especially as multiple-income households continue to be the norm. It’s not unusual to have two or even three car loans but getting approved for multiple loans can be a bit of a challenge.
Here’s what you need to know to boost your chances of getting that all-important approval — and great interest rates — on car loans.
Can You Truly Afford Two Car Loans?
Before you sign on for a second car loan, be sure that it is truly something you can afford in the long-term. What happens if you lose a job or have reduced income for other reasons? You need to have a backup plan in place that will allow you to pay for both car loans on a monthly basis.
Getting Approval for Two Car Loans
Financial institutions realize that they are taking on greater risk for individuals that have two car loans, and that may cause your rate to be higher than you expected. Lenders are looking for individuals or families with exceptional credit as well as a good debt to income ratio.
Lenders might also review how much time you have remaining on your original car loan and use that as a factor in their calculation of your approval and the potential interest rate for your second car loan.
Consider Federal Credit Unions
When you are looking for a second auto loan, federal credit unions may be the best option for your needs. These federally insured institutions may be more flexible in offering you a solid rate and extending the additional credit dollars that you need.
While getting a second auto loan isn’t impossible, there are some serious considerations before you add this layer of debt to your life.