Borrowers with less than perfect credit need to be aware of how subprime lenders will look at the income from a second job.
Bad credit and a second income
Here at Auto Credit Express, an applicant that we assume has had past credit issues asked us this question: "I am trying to apply for a loan but it's only letting me enter one of my employers. I work two jobs and want to know if it's possible to enter both or should I just combine both as to what I make a month."
The answer to this question is, yes, you can combine the income from both jobs on your application provided the second (lower paying) job meets lender requirements. But you should also be prepared to explain this when the dealer calls you.
Income issues with poor credit
The minimum monthly income requirements for credit-challenged car buyers varies by lender, but it typically ranges anywhere from $1,500 to $1,800 in gross (before taxes) wages. Everything else being equal, the higher the income, the better an applicant’s chances are for an approval.
More income also comes with other benefits including:
• A larger selection of vehicles
• A wider choice of lenders
• A broader payment range because of a better payment to income ratio
• The ability to offset more debt for an improved debt-to-income ratio
So with all these advantages, what lender requirements must be met in order to add the income from a part-time job to an applicant's regular income?
Qualifying income from a second job
In order for a subprime lender to consider part-time income, it must be consistent and the borrower must be able to prove this as well as the amount. Consistency means applicants typically must show that they have been receiving this income for at least a year. In order to be able to prove the amount, applicants must be able to produce pay stubs, 1099 forms or bank statements (showing deposits on a regular basis).
Lenders will also typically give more weight if the additional income is from the same field of work – for instance, someone in a skilled trade that also regularly does this work on the side or an applicant who works for a software company that also does programming on the side.
There is also one more thing to consider: not all subprime lenders will necessarily consider a part-time job as additional income (which is why they must explain the combined income on the application when interviewed by the dealer).
The Bottom Line
If you have two jobs, you can combine the income on the application provided it is received on a regular basis and it can be proven with documentation such as pay stubs or bank statements. But since not all subprime lenders will allow this type of income, applicants will need to explain this circumstance to the dealer during the initial interview.
One more thing to remember: Auto Credit Express matches consumers with tarnished credit to dealers that can offer them their best opportunities for an auto loan approval.
So if you're ready to establish your credit, you can begin now by filling out our online car loan application.