Buying a New Car with an Existing Loan
The need for a loan can come about for a number of different reasons for people who can’t afford to pay out of pocket. In most cases an individual might have to apply for financing for:
- A car
- A house
- Your education
- Other personal reasons
When you already have one loan out, is it possible to purchase a car and get a lender to finance you? Well, it depends upon a few factors.
The Amount of The Other Loan
The total amount of money that you owe on the other loan can have a significant impact on whether or not you get approved for the new car. Let’s say that you owe $500,000 on another loan for your house. This amount of money is a tremendous one, and it can be difficult to get guaranteed auto financing when you already have such a large one out. Of course, other financial factors are going to come into play.
Your Total Financial Situation
Again, we need to look at the entire financial situation. If you are making billions of dollars each year, then the $500,000 loan on a house will probably not affect your obtaining of auto financing. The lender for the car loan is going to look at the entire picture. The lender is also going to look at where your credit scores stand. When your credit scores are low, receiving approval for any type of finance agreement will be difficult. You want to start working on repairing your credit now if that is a concern.
How You’re Doing
Of course, lenders always need to make sure that the people to whom they are paying the loans are reliable and trustworthy. For example, maybe you have a fairly small loan amount out, but you barely make payments on it. When the payments do come in, they are rather late. A lender is going to look at you as a huge risk and not want to give you financing. Remember, your credit report and credit score are two major factors that have to be considered when a potential loan is about to be provided. Therefore, not paying your current loan is a major warning sign to any lender out.
Indeed, you can certainly take out one loan when you already have another one out. However, you need to look at the total picture, and the lender will do the same to determine if you are a suitable candidate for another loan.
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