Consumers with questionable credit and a new job should be aware of how their new employment circumstances will affect their chances for an auto loan
What we know
At least that’s what we think here at Auto Credit Express where we’ve spent the past two decades helping car buyers with problem credit looking for online auto loans find those new car dealers that can offer them their best opportunities for loan approvals.
This experience has also given us a unique insight regarding the typical requirements of lenders that work with consumers that have bad credit – at least those that report auto loans and payment histories to the credit bureaus. We’d also like to point out that this discussion isn’t meant to discourage anyone from applying, since special circumstances are always taken into consideration. We simply want to clarify the fact that even high risk lenders have certain requirements that, in some way, need to be met.
It’s easier to understand the reason higher-risk lenders have employment requirements if you know the three basic requirements they look for in an applicant – ability, stability and willingness to pay.
• Ability – Does the applicant make enough money to comfortably pay his/her bills plus a monthly car loan and auto insurance payment?
• Stability – Does the applicant have an established and stable source of income?
• Willingness to pay – Is the applicant’s current credit situation a result of situational (a single event such as job loss or a medical event) or habitual (never paying any bills on time) poor credit?
When considering an applicant’s employment situation, most high-risk lenders look closely at both ability and stability.
Requirements for employment
In the case of employment, stability and ability go hand in hand. In this case most subprime lenders will look for a minimum of three to four months of continuous employment. The longer the job time the more stable the employment situation becomes. Everything else being equal, the longer an applicant has been on the job the better that individual will be viewed, as a risk, by these lenders.
The reason for the minimum job time requirement is that it allows lenders to verify an applicant’s actual income level. In addition, it also allows them to see if an hourly employee is consistently working overtime and whether or not all or a portion of the overtime can be included in their income calculations.
Earlier we stated that special circumstances can be taken into consideration. In this case a short time on the job – that is less than three to four months with a current employer – can usually be offset by situations that include either switching employers for the opportunity of more income or employment with different companies in the same field.
Other circumstances we have observed that can, to a certain extent, offset a shorter employment time include a lengthy term of residence in the same area and/or home ownership as opposed to renting.
As we see it
With a new job, poor credit and a need for personal transportation, car shoppers need to realize that when it comes to employment, most high-risk lenders are looking for some type of stability. While there are no hard and fast rules, three to four months of job time is usually considered to be a minimum, although certain shortcomings can sometimes be offset by other factors.
Another thing to keep in mind: at Auto Credit Express we match credit-challenged applicants with those franchised new car dealers that can give them their best chances for approved auto loans.
So if you’re ready to reestablish your car credit, you can begin now by filling out our online application.