Most people purchase one vehicle at a time. But there might be some instances where you want to purchase two or more vehicles and pay them off overtime.
Legally, you are allowed to have multiple auto loans, but the process can get a little complicated. Here’s what you need to know about financing two cars simultaneously.
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Can You Finance Two Vehicles at the Same Time?
You are allowed to finance more than one vehicle at the same time. Technically, there’s no limitation to the number of vehicles you can finance. However, that’s assuming you’re able to stay consistent on all the payments.
Just because you can finance more than one vehicle, doesn’t mean you will find many lenders who are willing to give you multiple loans.
When you have more than one loan payment, it increases the likelihood that you’ll miss a payment or default on the loan. Providing more than one loan at a time is very risky for lenders.
If you’re thinking about financing two cars on the same auto loan, that’s probably not an option. Most auto loans are secured, meaning the vehicle is used as collateral.
If you default on the loan, the lender can repossess the car and sell it to get some of their money back. As a result, most lenders will only issue one auto loan for each vehicle you want to finance.
Auto Loans vs. Personal Loans
When it comes to financing multiple vehicles, you typically have two options. You can either get a traditional auto loan or a personal loan.
An auto loan is secured, using your car as the collateral. When you take out an auto loan, the money must be used to purchase a vehicle. The vehicle must also meet the lender’s requirements. For instance, some lenders only offer loans for vehicles that are less than 10 years old or have less than 150,000 miles.
With a personal loan, you aren't required to spend the money on a particular type of purchase. Personal loans are usually unsecured, meaning there’s no collateral.
If you default on a personal loan, the lender may attempt to collect on your personal assets, like your savings or retirement accounts, to get the money back.
While you typically can’t finance two vehicles on the same auto loan, you might be able to finance multiple cars using a single personal loan. Because there’s no collateral, you could borrow a large sum of money and use the funds to purchase two cars.
However, you should only consider this option if you can afford the monthly payment. If it stretches your budget too thin, you could end up defaulting on the loan, which can negatively impact your credit score.
You could also lose the vehicles if you have to sell them in order to pay back the loan.
How to Get Two Car Loans
The process of getting two auto loans is the same process as getting one loan. You will need to shop around and compare lenders, submit an application, and get approved for the amount of money you request.
If you have good credit, a consistent income, and a solid financial background, getting approved for your first auto loan should be fairly simple. However, it becomes much more complicated when you apply for a second loan.
Due to the increased risk of having two car loans, lenders will probably have much stricter eligibility requirements before you can get approved.
For example, you might only need a good credit score (670-739) to get approved for one auto loan. But if you want a second loan, the lender might expect you to have excellent credit (800+), to reduce risk.
If you can get approved for two auto loans, you must make sure you can comfortably afford the additional costs. Avoid taking on a second loan if there’s a chance you won’t be able to keep up with the payments.
Otherwise, you might face serious consequences that could impact your credit and your ability to take out new loans in the future.
You should also ensure that you can afford the higher cost of car ownership. If you’re financing two cars, it’s a good idea to budget for double the amount of routine maintenance, such as oil changes, new tires, annual registration, and emissions testing, as well as car insurance.
Most car insurance companies allow you to insure multiple vehicles on the same policy. You might even be able to save money with a multi-vehicle discount.
While financing two cars at once is possible, it can be extremely expensive. Before you take out a second auto loan, it’s important to weigh the pros and cons, and make sure your current financial situation can support more than one loan.
Elizabeth Rivelli
Finance & Insurance Editor
Elizabeth Rivelli is a freelance writer with more than three years of experience covering personal finance and insurance. She has extensive knowledge of various insurance lines, including car insurance and property insurance. Her byline has appeared in dozens of online finance publications, like The Balance, Investopedia, Reviews.com, Forbes, and Bankrate.
