Buying a car is expensive, there's no doubt about that. So it's unsurprising that 90% of new cars get bought using some form of car finance plan.
Of course, there is the option to buy a car outright with cash, and it's definitely a good option if you can afford it. However, financing a vehicle has many more benefits than not paying a lump sum, as explained in this previous article.
The majority of people that finance a car will only tend to have one car and subsequently one finance agreement. If another household member has a vehicle on finance, they may have their own finance agreement.
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However, a common question we've heard recently is, 'is it possible to finance more than one car at once?' The answer to this question is yes, it certainly is, although there are a few stipulations that must be adhered to that we will get on to shortly.
You could have a joint car finance agreement with a partner or someone else living with you. If you wanted to take out joint car finance on one vehicle and then later decide you needed a second car, you could take out a second joint agreement.
Can I have more than one finance agreement?
Many households require more than one car for everyone living there. From driving to work to taking the kids to school, it can be necessary to have more than one motor to juggle the load between you.
If you want more than one car finance agreement you can apply, but it won't necessarily be accepted. There are a few conditions that a lender will need to be satisfied by before granting your loan request.
For example, will you be able to make repayments on two vehicles? Is your credit score still as strong as it was when you took out your first loan? Will you be left with enough money after your repayments to afford everything else? Those are some of the questions lenders will ask, and if the answer is yes to all of those, there's no reason why you wouldn't be approved.
Equally, if you have less than six months left to repay on your first loan, lenders will likely consider that loan paid off already, and therefore, you'll be free to take out a second loan.
A risk to lenders
As you would probably expect, having more than one finance agreement makes you a higher risk to lenders because you are already taking on two significant loans to make your car repayments.
They are considered more likely to withdraw from one of the two finance agreements because they can't afford to make the payments at one point or another. The same goes if you want to take out a payment plan for something else, such as a mortgage.
Can I afford to take out more than one loan?
Lenders will look into your affordability before accepting any loans you apply for. If you have a secure job and earn a consistent and 'good' salary, you will have more chance of being approved.
Not only that, but lenders will also look at your other monthly outgoings to see if you can afford the finance repayments. These will include your initial finance agreement if taking out a second.
If you have plenty of income after making the two car finance agreements, you should have no problem getting approved.
Will my credit history be checked?
When you take out a second finance deal, lenders will look at your credit history to see how you've borrowed previously beyond your first deal. Providing your credit score is in a healthy condition, you should have no issues getting approved.
How can I give myself the best chance of approval?
If you can put down a larger deposit, this will significantly increase your chances. That's because it shows a lender you have the money to afford it and will also reduce the amount you should expect to repay.
If you apply and get rejected, give it time before making a new application. Loan applications can go on your credit history, and lenders may negatively react if they can see you've previously been disapproved.
If your credit score isn't in the best shape, take some time to rebuild it before applying. It will give you a much better chance of being approved and avoids having blemishes on your credit history.
Try your best to make repayments on other smaller outstanding loans, as the fewer outgoings per month, the more chance you'll have of being approved for a second car finance.