What are Second Car Loan Requirements?

You can avail of a car loan to purchase a vehicle. It is a credit facility that a bank or lending company gives you to buy a car or any other vehicle. If you take a car loan, you can repay it in three to five years on payment of simple interest on the loan amount. This interest, however, varies from one bank to the other and one lending company to the other. You can also take a car loan from other credit unions. Availing of a car loan has also been made easier for you as the car and motor vehicle dealers make all arrangements to help you avail of the loan.

How Do Car Loans Work?

The process of car loan advances is quite simple. The concerned bank or lending company sanctions you on the loan to finance a car. You have to repay the loan amount on a regular monthly installment payment schedule made by the lending company or bank. You pay simple interest on this type of loan. Usually, you have to make a down payment of 10% of the total value of the car. The Remaining 90% will be financed by the lending company. The lending company will charge simple interest on the amount loaned to you by it.

[Read More: How Soon Can You Refinance a Car?]

Can Your Lender Finance Two Cars Simultaneously?

Yes, your lender can finance two cars simultaneously. Your lender, however, will judge your income and repayment capability by paying installments for the two cars you may buy. Before sanctioning your loan to buy two cars, your lender may take the following points into account:

i. Your Source of Income: The lender will first assess your total annual income based on the record of your income history or salary. This income history will enable the lending company to assess whether you will be able to repay the principal loan amount for two cars plus the simple interest payable on the total loan amount.

ii. Your Debt-to-Income Ratio: The DTI (Debt-to-Income Ratio) is the determining factor for advancing your loans to buy two cars simultaneously. The DTI finds out if you have sufficient annual income to repay the loan, pay the loan interest, debts incurred on Credit Cards, Mortgages if any and student loans if any.

iii. Your Credit Score: Your credit score is a determining factor for your eligibility to avail of two car loans simultaneously. Credit score history will tell your previous loans, their repayment on time and other records of institutional borrowing. It shows your creditworthiness. If your credit score is high, you can avail of two car loans simultaneously. If it is bad, you may not be avail of the loan. A credit score of 670 is considered ideal to avail of two car loans.

How Can You Improve Your Chances of Getting a Second Car Loan?

Getting two car loans simultaneously depends on certain factors. You have to comply with those points to be eligible to avail of loans for two cars. Your lending agency will assess the following two points before sanctioning the two car loans:

i. Dispute Your Credit Rating Errors: You should file Disputes regarding your credit rating. If you feel your credit rating scores are low and you Dispute it, you can claim Errors. There are credit rating bureaus and agencies in the USA. You can contact them to Dispute the low credit rating. If the Dispute is corrected, your credit rating will automatically go up enabling you to take two car loans simultaneously.

ii. Pay Down Revolving Debt: You have to documentarily prove your income is quite sufficient to repay the loan amount plus simple interest for two car loans taken simultaneously. The two loans may run concurrently, but you have the sufficient annual income to cover both liabilities.

[Read More: How Does A Car Loan Affect My Credit?]

Conclusion

Personal cars are now considered a necessity not a luxury. To commute to the office from home, take a weekend trip outside the city and do shopping, you require a car. The use of a personal car proves to be much cheaper than a hired car. As a result, a personal car is your necessity.

FAQs (Frequently Asked Questions)

Does having 2 car loans hurt your credit?

Answer: No! Your creditworthiness depends on your annual income vis-à-vis your annual liabilities like home loans, vehicle loans and credit card loans. So long as you are able to pay two car loans regularly, your credit rating will not be hurt. But it depends on your steady annual income. Some lenders allow you to repay the two car loans over a period of seven years. If you feel you can repay the two car loans within seven years, your credit rating will go up rather than come down.

2. Is it harder to get a second car loan?

Answer: No, it is not if you can furnish proof of high income and ability to meet the repayment schedule stipulated by the lending agency. However, if you cannot submit documents proving your ability to repay the second car loan, you may not be able to avail of the second car loan.

3. Can I finance 2 cars from the same bank?

Answer: Yes, you can buy it. But the bank or any other lending agency will scrutinize your ability to repay the loan amount for two cars plus the interest servicing. You have to prove this on the basis of your high income. If your income rises, you can seek a second car loan from a bank or any other lending institution. If it is so, you can get finance for two cars from the same bank or lending agency. It would not be a problem.