Yes, in the case of auto loans, you may be able to add the balances of two or more car loans together and get one payment. This merger is called debt consolidation. There’s another way to merge loan balances though, too.

Merging Debts: Debt Consolidation

Debt consolidation is more common with revolving credit, such as credit cards. However, it is possible to consolidate other types of debts, such as mortgages and auto loans.

For example:

If you have a car loan with a $5,000 balance and another with a $6,500 balance, and you qualify for a debt consolidation loan, the debts merge into one $11,500 loan. The two auto loans are paid off with the $11,500 loan, ending those contracts. You now have one car payment and one interest rate on the new, single loan with one lender.

Auto loan debt consolidation is similar to refinancing in that you’re replacing a loan with a new one in the hopes of getting a better deal or more affordable monthly payment. However, it isn't all that common of a practice.

Much like refinancing requirements, the lender you’re applying with for the debt consolidation loan may require that your vehicles have equity, and that you have good credit, or that your credit score has improved since you started the two auto loans.

You’re likely going to need to seek a direct auto lender, such as a credit union or bank, to apply for debt consolidation. It’s also a good idea to shop with multiple lenders to see what rates you can qualify for with your credit situation.

Benefits of Merging Debts

Can You Merge an Existing Auto Loan With a New One?Borrowers often consolidate debts for ease and convenience, since adding your debts together with one larger payment can be easier to manage. By combining debts, there may be less of a risk of something falling through the cracks.

Another possible benefit from debt consolidation, if done correctly, is that you may save money on interest charges. While you’re rate shopping with debt consolidation lenders, compare their rates to your existing auto loan rates. Average your two interest rates and use an auto loan amortization calculator to see if merging the car loans together is going to cost you more or less in interest charges.

Another Method of Merging Loans Together

Aside from consolidating your auto loans together and keeping both vehicles, there’s another way to merge car loan balances. If you have a vehicle with negative equity (where you owe more on the loan than what it’s worth), you may be able to sell that vehicle and add its negative equity onto your next auto loan.

This is called rolling over negative equity. This is helpful for borrowers who want to sell their vehicle but can’t get an offer high enough to pay off their loan balance.

There is some risk in rolling over negative equity, since you may end up with a large loan balance on your next auto loan. If you have poor credit, this can mean paying even more for the next vehicle, since bad credit borrowers may qualify for a high interest rate.

Looking for Something Else With Poor Credit?

If you’re in need of another car loan but your poor credit score is getting in the way, then let us help you at Auto Credit Express. We’ve been assisting bad credit borrowers for over two decades by connecting them with dealerships that are signed up with subprime lenders. These lenders are equipped to handle many unique credit situations. Complete our free auto loan request form and we’ll look for a dealer in your local area.