Many Americans find themselves working multiple jobs. So, it begs the question: can you get a car loan with more than one job?
Getting a Car Loan with More than One Job
You can get a car loan with multiple incomes, but lenders only look at the highest-grossing one to determine if you qualify. Generally, lenders require you to have a minimum gross income (pre-tax amount) of $1,500 to $2,000 a month from a single source.
From this, lenders will calculate your debt to income (DTI) and payment to income (PTI) ratios. Note that when you have more than one job, the lender may incorporate the incomes from them as well (depending on how long you’ve had them) to calculate your DTI and PTI ratios.
DTI is important when determining how much car you can afford. It’s easy to calculate, too. Just add up all of your monthly bills such as rent, credit cards, and loan payments and divide that amount by what you get paid each month before taxes are taken out (monthly gross income). Your DTI should be no more than 50 percent – any higher and you run the risk of being turned down. As for your PTI, take your total expected monthly car and insurance payment and divide that by your gross monthly income. Lenders want to see a payment to income ratio of no more than 20 percent.
For an easy online tool, our Car Loan Estimator is a great place to start. This calculator gives you an idea of what you can expect to be paying for your next car loan.
Additional Income: Tips and Self-employment
When it comes to second or third jobs, lenders will look to see how long you’ve been working there. Typically, lenders like to see that you’ve held down your job (or jobs) for at least six months to a year. Stability is important, and lenders want to make sure you’ll have a solid income throughout the loan term.
If one or more of your income sources relies heavily on tips, make sure they’re reported each year. It’s illegal to only report only a portion of the tips you earn, and not doing so can affect your chances of getting approved for an auto loan. Because earned tips are verifiable income (reported to the IRS), if you only report a portion of what you actually earn, your reported income could end up being less than the lender’s minimum income, DTI, or PTI requirements, hurting your chances of getting a car loan.
If your main or secondary source of income is as a contract employee (self-employed) and reported on a Form 1099, you aren’t automatically disqualified from qualifying for an auto loan. What you’ll need to do is verify your income with the proper documentation – typically three years of your most recent tax returns – to show the lender. As long as you meet the lender’s basic income requirements (in this case your net income from Schedule C), it won’t matter if you’re self-employed.
If you have two or more sources of income, make sure that one of them meets the lender’s minimum income requirement. If you have bad credit on top of that, it can be challenging to find a lender that'll work with you. Luckily, at Auto Credit Express, we specialize in connecting credit-challenged car buyers with dealers that have these types of lenders.
We work with a network of dealerships all across the country that have the right lenders for unique credit situations. Get started today by filling out our free online auto loan request form.