Can you merge an existing auto loan with a new one?

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Yes, in the case of auto loans, you may be able to add up the balances of two or more auto loans and get a single payment. This merger is called debt consolidation. There is also another way to merge loan balances.

Debt merger: debt consolidation

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

For example:

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

Car loan debt consolidation is similar to refinancing in that you replace a loan with a new one in the hope of getting a better deal or a more affordable monthly payment. However, this is not that common of a practice.

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

You will likely need to go to a direct auto lender, such as a credit union or bank, to apply for debt consolidation. It is also a good idea to shop around with several lenders to see what rates you may qualify for with your credit situation.

Benefits of Debt Merger

Borrowers often consolidate debt for ease and convenience, as adding your debt with a larger payment can be more manageable. By combining the debts, there can be less risk of something going through the cracks.

Another possible benefit of debt consolidation, if done correctly, is that you can save money on interest charges. As you shop for rates with debt consolidation lenders, compare their rates to those on your existing car loans. Average your two interest rates and use an auto loan amortization calculator to see if the auto loan merger is going to cost you more or less in interest charges.

Another method of merging loans

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

This is called the negative equity rollover. This is useful for borrowers who want to sell their vehicle but cannot get an offer high enough to pay off their loan balance.

There is some risk in rolling over negative equity, as you could end up with a large loan balance on your next car loan. If you have bad credit, it can mean paying even more for the next vehicle, as bad credit borrowers may be eligible for a high interest rate.

Are you looking for something else with bad credit?

If you need another car loan but your bad credit is in the way, let us help you Auto Express Credit. We’ve been helping bad credit borrowers for over two decades by connecting them with dealers who are registered with subprime lenders. These lenders are equipped to handle many unique credit situations. Fill out our free auto loan application form and we’ll search for a dealership in your area.


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