Dealing with Poor Auto Credit and Disability Income

How to improve the chances for car loan approvals from high risk lenders if you rely on disability payments for at least part of your monthly income
Dealing with Poor Auto Credit and Disability Income
What we know

If all or even part of an applicant’s monthly income comes from disability pay – especially if that person has experienced credit problems, this can have a negative effect on the approval process.

The fact is, here at Auto Credit Express we are familiar with how this can impact the chances of auto loan approvals from subprime auto lenders because we’ve spent more than two decades in the auto business. During that time we’ve helped thousands of car buyers with poor FICO scores find those new car dealers that can offer them their best chances at approved auto loans.

Working with disability income

The hard fact is that it’s not easy getting approved for a car loan if all of a portion of your income comes from SSI disability payments even for consumers with great credit. Knowing this, it should also come as no surprise that it’s even more difficult if applicants have experienced auto credit issues.

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

This means that if someone who receives disability income has a car repossessed, the lender can’t garnish at least that source of income in order to pay off any loan balance.

You’d better believe that lenders that offer high risk car loans are also aware of this and are extremely cautious when someone with a checkered bill payment history that receives their income from SSI disability payments submits an application.

According to the website, this rule typically also applies to “private disability insurance payments.”

Despite this fact, there are at least two situations where subprime lenders might consider an applicant with this type of income:

•    If an applicant can prove additional income sources that could be garnished, such as W-2 wages from a job (the longer the job time and higher the additional income, the better the chances)
•    If an applicant can show long-term residence stability and “situational” versus “habitual” bad credit (present credit issues stemming from a single incident such as a medical issue or job loss versus nothing but previous slow pay history). In some situations this will also improve the applicant’s chances for an approval.

If an applicant is claiming either private or SSI disability income, 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.

The Bottom Line

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

To further improve your odds, you should also know that Auto Credit Express specializes in matching consumers with bad credit with those new car dealers that can offer them their best opportunity at approved auto loans.

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

Posted on November 13, 2012 by in Bad Credit
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