Getting approved for auto financing with bad credit can be tough. When you stack employment issues on top of that, the situation can become even tougher. One of the factors a subprime lender is looking for is stability, so the longer you’ve been employed at a job the better.
Time is of the Essence
All subprime lenders have different requirements when it comes to qualifying for an auto loan, so no rule is set in stone. But there are some key factors that are typically required by most of them. To start with, four to six months of employment at your current job is usually required. Lenders also like to see at least three years of continuous employment history with no long periods of unemployment.
Looking at a lengthy period of your employment history will allow a lender to evaluate how stable your source of income is. This helps them to see your actual income level, which can be especially helpful for hourly employees because a lender can evaluate things like consistency of overtime hours worked.
Changes in Full-Time Employment
It’s important to know that, no matter your employment situation, the lender is simply trying to make sure that you make enough money to afford a car payment. Their requirements aren’t meant to make getting a loan harder, but to ensure that you can comfortably make your car and insurance payments along with the rest of your monthly bills.
Frequently switching jobs can hurt your chances of getting approved, but lenders do understand that sometimes a job change is necessary. In the case of a recent job change, lenders will take into account things such as remaining in the same field of work or if you switched jobs for better pay.
Other Types of Employment
Every car buyer has their own unique situation, and lenders will base their final decision on their evaluation of these circumstances. However, there are some situations where it will be harder to get an auto loan. For example, if you're a part-time employee or hold several part-time jobs, a lender will only consider your income from one job, and it will typically have to gross over $1,500 a month.
Seasonal employees will also have trouble getting financed. Even if you earn enough income seasonally to last for an entire year, lenders may require a cosigner in some cases. Seasonal workers who rely on unemployment in the off-season may find getting financed to be especially tough. Only earned income can be used to qualify for an auto loan. Unemployment benefits will not count toward income requirements, your debt to income (DTI) ratio, or your payment to income (PTI) ratio.
The Bottom Line
With a bad credit auto loan, there are many requirements that need to be followed. One of the best ways to make getting a subprime auto loan easier is to show stability in your employment. As long as your earned income is high enough, your employment history goes a long way to help you in the eyes of a lender.
If you're ready to purchase your next vehicle, but bad credit is getting in your way, Auto Credit Express wants to help. Our network of special finance dealers have the lenders available to work with people in unique credit situations. Take the first step today by filling out our simple online auto loan request form now!