Getting Approved with Poor Credit and Overtime Income

Under the right circumstances credit challenged borrowers may be able to include overtime pay to qualify for a subprime auto loan

Our experience


Borrowers with bad credit who receive overtime pay should know, even before beginning the application process, how this income is typically treated and how it might affect their chances for a car loan approval.

The reason why an understanding of this issue is so important is that in some cases simply waiting for the right time to apply can often mean the difference between a rejection and an approval for a car loan.

Income Requirements & Overtime Pay

Monthly income rules vary by lender, but anywhere from $1,500 to $1,800 gross (see understanding lender income requirements) is normally the minimum income requirement. In most cases, the higher the income, the better the chances of an approval. In addition, a higher income level also means a larger selection of available vehicles as well as a greater choice of lenders.

A second consideration is that once the income requirement is met, lenders will then compare it to the applicant’s total monthly debt. This debt-to-income ratio will determine if the applicant has enough available income to qualify for a car loan. Once again, larger incomes can support higher debt.

This means that if applicants can add overtime income to their regular income, they’ll have a wider selection of lenders and vehicles to choose from.

So if overtime income is good, what lender requirements must be met in order to add this type of income to an applicant’s base pay?

Overtime Income

In most cases, subprime lenders need to see that an applicant’s overtime pay both exists and is consistent.

A pay stub showing regular pay and overtime pay shows that the applicant does receive overtime income. But in order to prove that overtime pay is consistent over time, the pay stub will need to show that the applicant has been receiving it on a regular basis for at least six months.

This isn’t a problem if the application is submitted between July and December, but it could be if a borrower applies during the first six months of the year. That’s because even though that borrower might have a W-2 from the previous year showing overtime income, that doesn’t prove that he or she is still working overtime the following year. Some lenders, however, still might consider this situation if the applicant can supply W-2s from multiple years that all show overtime pay.

The Bottom Line

Subprime lenders will typically allow overtime pay to be added to an applicant’s regular pay if it can be proven that the overtime pay exists and that it is consistent over time. Car buyers with overtime pay will also find it much easier to apply for a loan during the last six months of the year when it can be proven more easily.

One more tip: Auto Credit Express matches consumers with credit issues to those dealers that can offer them their best chances for car loan approvals.

So if you’re ready to establish your credit, you can begin the process now by filling out our online auto loan application.

Posted on November 2, 2014 by in Auto Loans
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