Can you have two cars on finance?
Car finance can help you spread the cost of your next vehicle, but what if you want to have two cars on finance?
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Can you have finance on two cars?
Getting a car on finance will mean you can spread the cost of your car across several payments, depending on the type of finance you choose.
Whether or not you can have two cars on finance will depend on individual factors, such as your credit history and affordability.
You’ll also need to consider if financing two cars is the right option for you.
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How to get finance on two cars
All car finance lenders will have a slightly different application process, but all will need some personal details to carry out credit checks and assess your affordability.
There are a few things that car finance lenders might consider, especially if you want two cars on finance.
Lenders will consider these factors when you apply for car finance, but they might have stricter criteria if you’re applying for a second car on finance.
They’ll want to make sure you can comfortably cover the payments for both cars, without the risk of missed or late payments.
Credit history
Your credit history is made up of your ongoing and previous financial information, like any credit cards or loans.
All this information then goes towards helping lenders generate a credit score that can influence whether you’re accepted for a second car on finance.
Any late or missed payments, using too much credit, or even too little credit are all things that are recorded and considered and can result in a poor credit rating.
To generate the best credit score you’ll need to maintain a positive credit history.
Keeping on top of debt repayments and paying off credit cards are obvious ways to create good credit history.
You can often get a boost by doing things like registering for the electoral roll or fixing errors on your credit report.
Income
Being able to afford two cars on finance is probably one of the most obvious things you'll need to consider before applying, but lenders will heavily consider this as well.
You'll usually have to supply details of your income and some types of outgoings (such as your home rent or mortgage) when applying for car finance.
The lender will want to see that you’re still capable of covering the cost of two financed cars, alongside your other financial commitments.
They’ll likely consider your credit history and your affordability to determine if you’re a good candidate for two cars on finance.
Deposit
When you start a car finance contract, you’ll usually have to put down a deposit or make an initial payment.
Sometimes, offering a larger deposit can make you a more attractive applicant and could increase the likelihood that you’ll be accepted for finance on two cars.
All lenders have their requirements on what makes a good applicant and who they’re likely to accept, but a larger deposit can help.
Larger deposits or initial payments also decrease your monthly payment amount. This can be especially helpful when getting two cars on finance, as it makes those payments more manageable.
Payment term
You’ll pay your car finance across a payment term that will be decided at the start of your contract. Often, these payment terms are across 36 to 60 months, so you’ll need to decide what suits your needs.
When it comes to financing two cars, choosing a shorter payment term can be more attractive to lenders. Your monthly payments will be higher, but interest rates will be lower, and you’ll have paid up quicker.
With a long-term car finance loan, you’ll have lower monthly payments but a higher overall total cost due to higher interest rates.
A lender might feel more comfortable offering a second car on finance with a shorter finance deal, as there’s less of a chance your circumstances will drastically change and make it hard for you to keep up with payments.
All car finance lenders are different so it’s worth doing your research and having a soft credit check carried out to check your eligibility.
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Applying for PCP finance
Applying for PCP finance will always be a similar process, whether you’re applying for your first or second car finance loan.
You’ll make an initial deposit and estimate your mileage for the finance term, and your lender will then be in touch to let you know if you’ve been approved.
If you’ve been accepted for a second car finance loan, you’ll make your payments until the end of your contract.
You’ll then have the option to make a final balloon payment and take ownership of the car, or hand it back.
Applying for HP car finance
Just like PCP car finance, the HP finance application process will be the same each time you apply.
To get a second HP financed car, you’ll need to put down an initial deposit and apply for your car finance loan.
If accepted, you’ll make your finance payments on a monthly basis until your contract comes to an end.
You’ll then be the full owner of the car, without the final balloon payment that comes with PCP finance.
How many cars can I get on finance?
The number of cars you can get on finance will depend on your individual circumstances and your lender.
All lenders are different and will have different criteria, and your affordability will be one of the main deciders.
In theory, there’s no limit on the number of financed cars you can have at the same time. However, your lender will consider your individual circumstances and decide if they believe you can afford a financed car each time you apply.
The more debt you add on with each car finance loan, the lower your affordability. Your lender will see this and will consider how many finance loans you can realistically repay.
Too much finance can make you unattractive to a lender, so you’ll want to stick to what you really need and can manage.
Will having two finance cars impact my credit score?
Apply for any type of finance or loan will usually mean your credit score will take a temporary hit.
If you keep up with your payments, ensure they’re on time, and never miss a payment, then car finance can help increase your credit score.
Having two cars on finance will mean your credit score can drop each time you apply for finance, but staying committed to your payments will usually see your score rise over time.
On the other hand, some lenders might see two car finance deals on your credit report and see you as too reliant on loans and credit. They might view you as a higher risk lender because of this.
Car finance and how your credit history is interpreted will always depend on the individual lender and your personal circumstances.
Two cars on finance: is it right for you?
Getting a car on finance is a personal decision that you’ll have to make based on your own circumstances.
While it’s possible to get two cars on finance, whether you choose to go down this route will need to be based on what’s right for you.
Consider things like your income, financial commitments and any upcoming life changes. Missing car finance payments can have a negative impact on your credit score and could lead to you losing the vehicle, as well as other financial repercussions.
For example - if you’re planning on having a child over the car finance period and will be taking some time off work, you’ll still need to continue your payments. Ensure that you plan ahead for the full finance term and any potential changes.
Car finance can be a useful way to spread the cost of your next car while dodging the big expense of purchasing outright, but there’s plenty to consider. That’s especially true if you want to get two cars on finance.