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 Job
Here at Auto Credit Express, a consumer 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."
Yes, you can sometimes combine the income from both jobs on your loan request form. Some lenders are willing to consider income from two jobs provided that you meet their length of employment requirements at both of them.
However, this is lender specific. Some lenders may require you to meet the minimum monthly income requirement from a single job.
So, it can vary from lender to lender. Be prepared to ask about this and be ready to explain this when a dealer calls you.
Income Issues With Poor Credit
The minimum monthly income requirement for credit-challenged car buyers varies by lender, but it typically is around $1,500 to $2,500 in gross (before taxes) wages. Everything else being equal, the higher the income, the better a borrower'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
With all these advantages, what lender requirements must be met in order to add the income from a part-time job to a person's regular income?
Qualifying Income From a Second Job
In order for a subprime lender to consider part-time income, it must be consistent, meet the lender's job history requirements, and the borrower must be able to prove this as well as the amount. Consistency means borrowers typically must show that they have been receiving this income for at least six months to a year. In order to be able to prove the amount, consumers generally must be able to produce pay stubs or 1099 forms.
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 who works for a software company that also does programming on the side.
There's also one more thing to consider: not all subprime lenders will necessarily consider a part-time job as additional income. This 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 sometimes combine the incomes, provided the lender allows you to and it meets their criteria as to how long you've had it. Income typically needs to be received on a regular basis and able to be proven with documentation.
Since not all subprime lenders allow you to add the income from a second job to meet the minimum monthly income requirement, consumers need to explain their 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 request form.