One of the most frequently asked questions our customer service department receives is “will I qualify for a car loan if ….”. There are so many possible scenarios it would be impossible to list them all here so I will address some of the major ones.

In our database we have over 100 sub prime lenders, each has an average of 5 lending programs. With over 500 programs in total there should be a program for almost every credit situation. The major factors lenders consider when you apply for a car loan are:

Credit Score

Most lending programs take into account your credit bureau score; the higher the score the better. Lenders that incorporate the credit bureau score in their approval formula usually cut off around 525. If your score is less than 525, it is still possible to get approved for an auto loan with a lender that does not use the credit bureau score in their formula.

Job Time

Many sub prime auto lenders look for at least one year on the job. If a consumer does not have a year on the job most lenders prefer three years of continuous employment with only 2 to 3 employers during that time period.

Income

Income requirements vary widely by the auto loan program. Most lenders, however, prefer around $2,000 per month gross (before taxes) income. There are several programs with lower income requirements.

Debt Ratio (DTI)

To calculate your debt ratio take all your bills, including your new car payment, and divide it by your total pre-tax income. Most lenders prefer a maximum DTI ratio between 40 and 50 percent.

Payment to Income Ration (PTI)

To calculate the payment to income ratio divide your new car payment by your pre-tax income. Most lenders prefer a maximum PTI ration between 15 and 20 percent

Loan to Value (LTV)

To calculate the Loan to Value, divide the amount you plan on financing by the wholesale book value of the vehicle. If you live in the western states use Kelley Blue Book, if you live in the central or eastern states use NADA. Most lenders prefer a LTV under 120 percent. Most allow a higher LTV amount if you choose to finance a service contract or GAP insurance.

Down Payment

Most sub prime lenders require some form of down payment (See blog Getting a Car Loan with No Money Out of Pocket ). If you have no money down and nothing to trade in there are a handful of programs available.

Approval Killers

Also called Automatic Rejections; these vary by lender. I have listed some below. I should note that these are not automatic rejections for all lenders, they are automatic rejections for some lenders:

• Currently in credit counseling
• A dismissed bankruptcy
• Multiple repossessions
• Multiple bankruptcies
• Past due child support
• Excessive tax liens

All lenders are not the same. If you do not meet all the criteria mentioned above there is still a good chance that you would qualify for numerous lending programs.