If you have bad credit and an income that isn’t taxable, you can still buy a car. However, financing one may be more difficult because of the rules subprime lenders have concerning the source of your income, but you still have some options to consider. The key is to work with the right lender for your situation, and we can help you find one.
The Subprime Lender Option
When you have poor credit, you likely need to apply for an auto loan through a subprime lenders. These are lenders that specialize in financing borrowers with less than perfect credit, and they're available through special finance car dealerships.
However, it's more difficult to get approved to finance a vehicle with bad credit and non-taxable income. The reason why is because subprime lenders typically require at least part of your income to be taxable. Therefore, if your only source(s) of income is non-taxable, a subprime lender is probably going to turn you down.
However, there are a few other ways you can still be approved.
To start, if you make a certain level of income that can be taxed, while still being able to meet the minimum income requirement with your highest-earning source of income, it's possible to qualify. Subprime lenders generally require that you make at least $1,500 to $2,000 a month from a single source.
Another option would be to add a cosigner or co-borrower to your loan that earns taxable income. If you add your spouse as a co-borrower, the two of you can even combine incomes to qualify jointly.
The Buy Here Pay Here Option
If you’ve been turned down by a subprime lender, or are wondering what other options there are, your next best bet is to visit a buy here pay here (BHPH) dealer. This is another name for an in-house financing dealership, which means they don't rely on outside lenders and instead finance the cars on their lots themselves.
Unlike subprime lenders, BHPH dealers typically don't have specific rules concerning the source of your income. Their minimum income requirement is usually along the same lines as subprime lenders, so you can still expect to need to make at least around $1,500 to $2,00 a month. However, they generally aren’t as concerned about where this income is coming from.
Another reason why a BHPH dealership makes sense for somebody with bad credit is the fact that many of these places don't run credit checks. They likely aren't even going to look at your credit score or credit reports, so the state of your credit doesn't come into play.
As long as you can show that you meet the minimum income requirement and can afford a loan payment, it doesn’t matter if your income is taxable or not or if you have bad credit. Just be aware of some of the downsides of in-house financing dealers.
The Waiting it out Option
If you’re determined to work with a subprime lender, the last option to consider is simply waiting until you can meet a lender’s income requirements. Perhaps you can pick up a side job to make the necessary level of taxable income to qualify, or you can convince a friend or family member to cosign.
As we mentioned, subprime lenders usually ask for a pre-tax monthly income of $1,500 to $2,000 from one job. In addition, they generally require that you’ve been with your current employer for at least six months, and can show a three-year work history with no gaps longer than 30 days between jobs.
If you're income isn't taxable and you can't get a cosigner or co-borrower, you can always wait until you've saved enough to buy a vehicle in cash, either through a dealership or private seller.
Ready to Get Started?
No matter which option you choose, your income is a big factor in determining what you qualify for. Your credit also plays a big role, but Auto Credit Express can help you find financing even if you're dealing with less than perfect credit.
Our service has been matching consumers to local special finance dealers for over 20 years, and we want to help you too. All you have to do is complete our quick and easy auto loan request form to get the process started today.