In this brief guide we are going to answer the question “can I get a car loan if I have a personal loan”.

Can I get a car loan if I have a personal loan?

Yes, you can get a car loan if you have a personal loan. A personal loan does not stop you from getting a car loan.

When a personal loan can affect you getting a car loan

There are however several scenarios where a personal loan could potentially prevent you from getting a car loan, these include:

  • You have missed repayments on your personal loan
  • You can’t afford a car loan due to the personal loan
  • Your personal loan is secured on the car
  • The personal loan is with the same lender as the prospective car loan lender

You have missed repayments on your personal loan

If you have missed repayments on your personal loan then this may affect your credit score and make it harder for you to obtain credit in the future.

A missed repayment will almost certainly push your credit score down and car loan lenders, who may already have a much higher lending criteria than personal loans may be wary to lend to you.

Your case may even be worse if you have missed numerous payments on your personal loan or defaulted on your personal loan. 

To ensure you can get a car loan if you have a personal loan you should ensure you make your monthly repayments on your personal loan and any other debts you have taken out in order to avoid bad credit such as:

  • CCJs
  • Bankruptcy
  • Defaults
  • Individual voluntary arrangements
  • Debt relief orders
  • Home repossessions

You can’t afford a car loan due to the personal loan

In some cases, you may not be able to get a car loan because you have a personal loan but this will simply be due to your disposable income not being able to cope with making both the personal loan repayments and the car loan repayments.

In this case, the solution is somewhat simple. You will need to increase your income, pay off a proportion of the personal loan or get a smaller priced car.

Your personal loan is secured on the car

You may not be able to get a car loan if you have a personal loan that is already secured on the car. 

This could be the case if your car loan is a car refinance loan for a car you already own.

In this case, the car loan lender will need to get a 2nd charge on your car and they may not be willing to do this.

A 2nd charge on the car will mean that if you default, the car loan lender will be second in line for any proceeds obtained through sale of the asset “your car”.

Most car loan lenders will prefer to have a 1st charge on the asset.

The personal loan is with the same lender as the prospective car loan lender

If your personal loan is with the same lender you want to obtain the car loan from then you may not be able to get a car loan due to having the personal loan with the same lender.

This is because some lenders have internal policies which restrict them from having two credit lines open to the same borrower.

In this case, you will need to find another lender to offer you the car loan.

How to get a car loan

You can get a car loan by applying directly to the lender or applying via a credit broker,(a car finance broker).

If you are applying directly to the lender then you may want to use a credit eligibility checker which will compare your creditworthiness to the lending criteria of various car loan lenders and match you with a lender who is willing to lend to you.

In some cases, you may even be pre-approved for the car loan.

In this brief guide we answered the question “can i get a car loan if i have a personal loan”.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.