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Can I still get a car loan if I have $10,000 in credit card debt?
I want to get a car loan, but I still have $10,000 in credit card debt. Can I get a loan? Or do I need to pay down my credit card debt first?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Credit card, or revolving, debt is one of the most common types of debt, so know you’re not alone! If you have good credit and income, you may be able to secure a
car loan
, even if you have $10,000 in credit card debt.The real issue is your debt-to-income ratio. A debt-to-income ratio compares your monthly minimum debt payments against your monthly income. If this is more than 43%, you’re going to have a tough time finding a lender to work with you. Moreover, the lenders that might work with you will also charge you a much higher interest rate.
If you’re below this 43% threshold, you can probably get a car loan. That said, you’ll still want to pay off as much of your credit card debt as possible. Car loans often come with a low
APR
compared to credit cards. Therefore, you should always pay off high-interest debt before anything else.Don’t forget you’ll also need full coverage car insurance as part of your agreement with your lender. Because full coverage can get expensive, you should always shop around. Hop on the
Jerry
app to compare rates from 50+ insurance providers and find the best full coverage insurance for your new car. The average Jerry user saves $879 a year!View full answer
- Gregory R.
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