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Car Finance for People on Benefits

How consumers with poor credit and disability benefits can improve their chances for a car loan approval

Our experience

Applicants with bad credit searching for online car loans that depend on social security or other types of disability benefits for all or most of their income need to understand that this can pose a problem for most subprime auto lenders. It can, in fact, result in a denial of credit.

Here at Auto Credit Express we know why this happens because we’ve spent more than two decades helping buyers with questionable credit find those dealers that can give them their best opportunities for car loan approvals.

So here, in a nutshell, is the problem concerning car finance for people on benefits:

Disability income

The fact of the matter is that it’s not easy getting approved for a car loan if all of a portion of an individual’s income comes from disability or SSI payments even for car buyers with great credit. Knowing this, it’s also no surprise that it’s even more difficult for applicants with credit problems.

The reasoning for this is simple: Social Security disability income cannot be garnished.

This means that if a person who receives disability income has their car repossessed, the lender can’t garnish that source of income in order to pay off any fees or an outstanding loan balance.

Lenders are well aware of this and, therefore, are especially cautious when someone with a checkered bill payment history and SSI disability income applies for a car loan.

But recipients shouldn’t just blame the Social Security Administration for this. According to the website DebtSettlementLawyers.com, in addition to SSI disability payments this rule also typically applies to “private disability insurance payments” as well.

Despite these facts, there are at least two situations where higher-risk lenders might consider applicants with this type of income:

• If applicants can prove they have another source of income that could be garnished, such as W-2 wages from a job (the longer the job time and higher the income, the better the chances)
• In some situations this will also improve a borrower’s chances for an approval: If applicants can show long-term residence stability and “situational” versus “habitual” problem credit (that is credit problems as the result of a single incident such as a medical issue or job loss versus a history of slow payments to lenders).

One thing to keep in mind: If an applicant is claiming private or SSI disability income, all lenders will require proof of this income. In most cases, this means providing a copy of the original award letter stating the payment amount as well as the duration of the payments. Other supporting documents such as bank statements may also be needed to prove that these payments are being received on a regular basis.

As we see it

Both private and SSI disability income is usually an issue with any car loan but it’s an even bigger problem if a borrower’s car credit is also an issue. To increase the chances of an approval, be sure to bring all documentation with you when you visit the dealership.

If you’re having a problem finding a dealer that’s willing to work with you, we also want you to know that at Auto Credit Express we do our best to match applicants that have experienced car credit issues with those dealers that can give them their best chances for approved car loans.

So if you’re ready to reestablish your auto credit, you can begin now by filling out our online application.

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