Getting approved for auto financing without proof of income when you’re a student isn’t likely to happen. You need proof that you’re able to pay for a vehicle if you need a car loan, no matter what your student status is. However, there are some ways to get approved for an auto loan with help or by having other income sources.
Proof of Income for Auto Financing
College students can sometimes have trouble working a full-time job and attending classes – it can be a big workload. But if you don’t have any income at all, you’re not going to be eligible for a car loan.
One of the biggest factors that determines your eligibility for vehicle financing is your proof of income. Most lenders prefer that you have W-2 income, proven by computer-generated check stubs that show year-to-date income. If you have 1099 income (or self-employment), many auto lenders require two or three years of tax returns.
For the income minimum requirements for car loans, most require that you’re making around $1,500 to $2,500 a month from a single source. The income minimums are met with your gross income (before taxes) – not your net income (bring home).
Other Income Sources
There still may be hope for vehicle financing if you have other permanent sources of income, or fixed income.
Temporary incomes, like unemployment, can’t be used as on an auto loan application because, most times, unemployment benefits only last up to six months. But there are many types of fixed income sources that some subprime car lenders do accept.
For example, some may accept alimony payments, Social Security benefits, or permanent disability. For these incomes to be accepted, you need proof that you’re going to receive it for the entire duration of the auto loan you’re applying for. Usually, this means providing a copy of an award letter.
However, it’s unlikely that many college students are receiving Social Security or similar benefits.
Can I Use My Student Loans to Buy a Car?
No, you can’t use student loans to purchase a vehicle. Many student loans state that you can use the loans to pay for the cost of transportation, but this means things like gas or parking – not the whole car.
If you don’t have other sources of income, and no provable W-2 or 1099 income, then you may have to buy a vehicle with cash until you can start earning a stable income. If you don’t have a stable income by yourself, you may be able to have someone help you out.
A Co-Borrower Could Help
If you have a spouse or life partner that has income, you may be able to bring them onto an auto loan application as a co-borrower. Co-borrowers combine their incomes to meet income requirements.
Most times, lenders require proof that you have access to each other's income, which is why most co-borrowers are married or living as life partners.
Your Credit Score Matters, Too
When you’re applying for a car loan, your income is just one part of the equation – your credit score matters, too. Poor credit can mean getting turned down for auto financing with traditional dealers and lenders, regardless if you have enough income to pay for the vehicle or not.
If you have bad credit, and provable income, consider subprime financing for a higher chance of a car loan approval. These lenders consider more than just your credit score when figuring out your eligibility. They take a look at things like your residency stability, employment history, and require a down payment.
The biggest bonus with a subprime auto loan is that it offers the chance for credit building. These loans are reported to the credit bureaus, so your on-time payments improve your credit score. The best way to build credit is by taking on new credit and managing it well. You can get two birds with one stone with subprime financing: get the vehicle you need and build your credit for future credit opportunities.
Finding the Right Dealer
Having a provable income is only one part of the car financing equation. Working with the right lender can make all the difference, too!
Not every dealership is teamed up with subprime auto lenders, but we know the ones that are here at Auto Credit Express. Over the last 20 years, we’ve gathered a network of dealers that spans the whole country. Get matched to a dealership in your area that has the lending resources you need for your credit by filling out our free car loan request form.
