💳 Does Having Existing Debt Affect Car Loan Approval?
Yes! If you already have personal loans, credit cards, or other debts, lenders will consider them before approving your car loan. Your debt-to-income (DTI) ratio plays a crucial role in determining whether you can take on more debt.
However, having existing debt doesn’t automatically mean rejection—it depends on how much debt you have, your income, and your financial situation.
🔍 How Do Lenders Assess Your Debt When Approving a Car Loan?
Lenders look at more than just your income—they compare it to your total debts to see if you can afford a new loan.
| Factor | How It Affects Approval | Ways to Improve Chances |
|---|---|---|
| 📉 Debt-to-Income Ratio | If your debts take up more than 40% of your income, lenders may reject your loan. | Reduce existing debts before applying. |
| 💳 Credit Card Utilisation | If you’re using too much of your credit limit, it signals financial strain. | Pay off some credit card balances to lower usage. |
| 🏦 Existing Loan Repayments | Having multiple loans can reduce borrowing capacity. | Consider consolidating debts into one lower repayment. |
| ⏳ Repayment History | Late or missed payments make lenders cautious about approving new loans. | Ensure all bills and loans are paid on time. |
If your existing debt is too high, a lender may reject your car loan or offer a higher interest rate.
✅ How to Get a Car Loan If You Have Existing Debt
If you already have debt but still need a car loan, follow these steps to boost your approval chances:
1️⃣ Check Your Credit Report – Ensure there are no errors or overdue debts affecting your score.
2️⃣ Lower Your Debt-to-Income Ratio – Pay off some debts or reduce credit card balances.
3️⃣ Consider a Smaller Loan Amount – A lower loan amount is easier to get approved for.
4️⃣ Provide Proof of Income Stability – Having consistent income reassures lenders.
5️⃣ Use a Finance Broker – A broker can match you with lenders who accept applicants with existing debts.
🚨 Can You Still Get a Car Loan If You Have Multiple Loans?
Yes! If you have existing loans, some lenders will still approve you—especially if:
✅ You have a stable job and steady income.
✅ Your debt-to-income ratio is below 40%.
✅ You have a history of making on-time repayments.
✅ You apply for a secured loan (where the car is used as collateral).
If you’re worried about approval, a finance broker can connect you with lenders who offer car loans to borrowers with existing debts.
🚀 Why a Finance Broker Can Help If You Have Existing Debt
If your car loan application was declined due to existing debt, a finance broker can find alternative lenders who consider more than just your DTI ratio.
✅ Find lenders that approve applicants with high DTI ratios.
✅ Help you structure your loan for better approval chances.
✅ Prevent unnecessary rejections that harm your credit score.
If you already have debt but need a car, you still have options! 🚗💨 A finance broker can help you find the best lender and get approved faster.
If you need a car loan but already have debt, don’t assume you’ll be rejected! A finance broker can match you with lenders who offer car finance even with existing loans.
DISCLAIMER
The information provided on this website is general in nature only and has been prepared without considering your financial needs, circumstances and objectives and should NOT be construed as financial, taxation or legal advice. For more information, get in touch with our experienced partner brokers today.
