How to Get a Second-Car Loan

How to Get a Second-Car Loan
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Things You'll Need

  • Recent pay stub

  • Calculator


If your debt-to-income ratio is near or above 60 percent to 70 percent, consider paying down some debt before buying a second car.

If you're declined at one bank, limit future applications. Each application can reduce your credit score, making it even harder to get approved in the future.


If you're declined for a loan based on income or credit, ask for specific reasons for the denial, as well as for suggestions on how to get approved in the future.

If you're declined for a loan based on a low value of the vehicle, get a value on your first car. If you have enough equity, consider refinancing and using the additional funds to purchase the second vehicle.

Shop around and negotiate. If the seller's price is above the Blue Book value, ask them to lower it.

Are you ready to buy a second car and need a loan? Qualifying for your second-car loan is similar to qualifying for your first-car loan. There are some important additional considerations, however, to take into account before you sign on the dotted line: Do you make enough money? Should you use the same lender? How much car can you afford? These are all common questions with relatively easy answers if you tap into the appropriate resources.


Step 1

Calculate your debt-to-income ratio. This ratio tells lenders how much extra money, or "disposable income," you're able to spend on additional items, like a credit card fee or another monthly car loan payment. To find this percentage, simply add up your bills (including your monthly rent/mortgage, student loan payments and car payment).


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Divide this number by how much money you make each month after taxes. For example, if you owe $600 in bills each month and your net monthly income is $1,000, then your debt-to-income ratio is 60 percent. Most lenders prefer this ratio to be below 50 percent, but the ideal percentage will depend on your income and credit history.


Step 2

Decide how much you can afford to spend. By using online loan calculators such as the ones found at, you can easily figure out how much a new loan will cost you each month.

Step 3

Apply for your new loan. Contact your local bank or credit union to submit an application. Your loan officer should inform you within one or two business days whether you've been approved or declined. If you have paid your first-car loan as agreed, consider applying at the same financial institution, as they may offer a preferred rate or reduced fees.


Step 4

Go shopping. Once you're approved, you need to find a new or used car that meets the bank's guidelines. Usually, this means that the bank won't allow you to purchase a car that is worth less than the sale price, has high mileage or has been in a major accident. Most lending institutions use Kelley Blue Book ( to determine a vehicle's worth. Use this resource as you shop to determine if you're getting the best value for your money.


Step 5

Consider consolidating your first-car loan with your second-car loan, especially if you've been offered a lower interest rate. If you've negotiated a good deal and are borrowing less than the value of the vehicle, you can use the cost savings to refinance your first-car loan. Request the payoff amount from your lender and discuss this option with your loan officer.


Step 6

Finalize the deal. Once you've found the vehicle you'd like, give your loan officer the details of the transaction. She'll need to know the value of the vehicle, who's selling it and if the seller owns the vehicle. Your loan officer will assist you in paying the seller or the seller's lending institution the required money in a preferred method of payment. Congratulations—you now have a second car.