Can you have two cars on finance?

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There are many reasons why one car may not be enough for your household. Perhaps you and your other half both have jobs that need a car to get to, but your workplaces are in opposite directions so you can’t car share. One of you may need a car to get the kids to school while the other needs one to get to work. Or you may have teenagers reaching driving age and you need a second car to give them something to drive. Multiple car ownership is a growing trend, and whatever the personal circumstances mean you need a second car, you might be wondering whether it’s possible to have two cars on finance at the same time. In this article, we’ll explore this option, along with the financial considerations it entails.

Understanding car finance: basics and beyond

With so many different ways to do it, getting your head around car finance can be tricky. As well as simply taking out a bank loan, you also have the option to pay monthly to lease a car to own it – and then there are different ways of doing that, such as Personal Contract Purchase (PCP), Hire Purchase (HP) and so on.

In principle, nothing is stopping you from taking out more than one car finance agreement. However, finance providers are required to lend responsibly and will take into account affordability when deciding whether or not to offer this to you. Lenders need to know that you’ll be able to afford the payments not just now, but for the duration of your contract.

Financial implications of having two cars on finance

There are several financial considerations when going down the route of having two cars on finance. The first is from your point of view: will you realistically be able to afford a second set of monthly payments, not just for the finance itself, but also for the other running costs associated with car ownership? What’s more, as car finance contracts typically run for two to four years, are your financial and life circumstances likely to remain as they are now until the end of the contract?

The second implication is how the debt would look to a third party. Your income and credit score have a major bearing on whether or not you’ll be able to finance a second car, and specifically a lender will look at the ‘debt to income ratio’ when deciding whether you can afford it. It’s also worth keeping in mind that applying for car finance will result in a hard search on your credit report – something that affects your credit score. Your score is likely to go down a bit when you first take out the credit agreement, and although it should bounce back once you start repayments, it can make it harder to take out two lots of car finance in close succession.

Pros and cons of multiple car finance

A big argument in favour of having multiple cars on finance is of course the convenience. When you’re struggling to make do with just one car, the flexibility you’ll enjoy by having two makes it an attractive option – especially if you want to have one car for work and another to use as a family car. What’s more, you might find there are discounts available for more than one car, whether from the lender or dealer or on things like insurance and breakdown cover.

The downsides to multiple car finance are all financial. You’ll have higher monthly costs to budget for, as well as more complex debt management to contend with. It’s also a higher financial risk because you’ll be tied into a contract for several years and liable to keep up the payments for the duration. Car finance doesn’t offer much flexibility, so it’s hard to get out of the contract if your circumstances change – even if you’ve lost your job and can no longer afford two cars.

How to decide if financing two cars is right for you

On the subject of flexibility, if it’s something you’d find reassuring – perhaps if you’re still working out whether or not your household needs a second car – another option is to take out a car subscription. This all-inclusive option has a monthly payment similar to taking out finance on a car, but it also covers all the running costs of the car, including insurance, servicing, maintenance and breakdown cover. 

This handy all-inclusive monthly fee makes it easy to budget the costs of having a second car, which is a big help when you already have the unpredictable monthly expenses of one car. Importantly, you can cancel a car subscription at any time, which means that if your circumstances change and you no longer need (or can no longer afford) a second car, you aren’t tied into any long-term finance agreements. And unlike with a car finance agreement, you only pay the equivalent of a month’s subscription payment upfront – which you’ll get back when you hand the keys back.

Financing more than one car brings with it the convenience of owning more than one vehicle, but it comes with a higher degree of financial burden and risk. The decision as to whether financing two cars is right for you will depend on your situation and finances, and you can make use of online budget calculators to help you work out whether it’s something you can afford. We’d also recommend seeking advice from a financial expert to help you make an informed decision. 

Here at Drive Fuze, our own finance experts are also on hand to help with personalised guidance on your car and financing options. Head over to our FAQ and support pages to find out everything you need to know about car subscriptions and finance.