If you have poor credit and are a pensioner, you may be wondering about whether or not you can qualify for an auto loan. Bad credit car loans differ from traditional auto financing in many ways. One difference is how subprime lenders look more closely at your income. They want to know how much you make, the source of your income, and they want proof of it, as well. While bad credit car loans for pensioners exist, subprime lenders do have rules you need to meet to qualify.

Can Pensioners Get Car Financing?

Bad credit auto lenders follow certain guidelines relating to borrowers' income, employment, residence, credit, and more. Ideally, they want applicants to hold a job and make a qualifying W-2 income. If not, they want a qualifying income that's consistent, verifiable, and able to be garnished.

The guidelines are different for borrowers that make unearned income, like pensioners. Unearned income is income from sources other than employment, such as social security, disability, alimony, child support, pensions, and more.

Some forms of unearned income aren't accepted as a primary source, including child support, alimony, and rental income. Other sources of unearned income are accepted by subprime lenders, which typically include social security, permanent disability, public assistance, and pensions.

Can You Get a Car Loan on the Pension?

Yes, bad credit car loans for pensioners exist. If a pension is your only source of income, you may be able to get approved for car financing with a subprime lender as long as you meet their other requirements. Typically, the other income requirements include:

  • Minimum Monthly Income – Subprime lenders generally require applicants to make a minimum of $1,500 to $2,000 a month before taxes from a single source.
  • Proof of Income – Applicants also have to verify their income with an acceptable form of proof of income. For buyers with W-2 income, a computer-generated paycheck stub from the last 30 days is sufficient. For pensioners and others that make unearned income, you need supporting documentation that proves how much you get, that payments are being paid to you, and that you're going to receive this income for the entire loan term. Some subprime lenders may require that you've earned this income for at least six months prior to applying.

Low Interest Car Loans for Pensioners

The interest rate you qualify for has nothing to do with whether or not your income comes from a pension. Your credit score is the most important factor that determines your interest rate, though a few other factors play a role, too. These include your loan term, the age and mileage of the vehicle being financed, and the rates available in the overall marketplace, among others.

Low interest cars loans for pensioners are only available to those who have good credit. If you have bad credit, you can expect to only qualify for higher than average interest rates, regardless of your source of income.

Additionally, if you're a pensioner that has good credit, you can disregard all of the additional qualifying guidelines subprime lenders use. With good credit, you won't have to prove your income, you just have to have an acceptable debt to income ratio.

The Bottom Line

Bad credit car loans for pensioners are available as long as you meet the other subprime lender requirements. So, where do you go to get financed?

Auto Credit Express can help you find bad credit car financing. We work with car dealerships all around the country that are signed up with subprime lenders. The dealers in our network are experts at helping borrowers in unique credit situations get financed. We'll work to match you with a local dealership – all you have to do to start the process is submit our free and easy auto loan request form.