Getting a vehicle with no income can be tricky. You don’t necessarily need a job to get a car if you have good credit, as long as you can prove you have enough monthly income to afford a vehicle. Or, you can pay cash. Just having an income source isn’t enough to qualify for a car loan, though, if you have poor credit.
Can I Finance Without Income?
If you have enough cash on hand, then your monthly income doesn’t matter to a dealership or buyer if you’re paying for a vehicle in full.
However, getting approved for an auto loan without any sort of income, or proof of income, may be next to impossible. Auto lenders vet applicants for car loans, and proof of income is one of the most important factors in vehicle financing.
If you have no income at all – including earned income from work, Social Security, alimony, child support, or even permanent disability – then you’re not likely to qualify for a car loan.
If you need to finance with poor credit, then you especially need sufficient income. Lenders require proof of income because they need to know that you can afford the loan and that you’re going to be able to continue to make payments throughout your loan term.
If you have no income, or not enough, but you have a life partner or spouse, you may be able to get an auto loan with their help if they have income. A car loan with two borrowers is called a joint auto loan. You and the other borrower are called co-borrowers, and you combine your incomes to meet the requirements of the lender. Both borrowers share responsibility for making the loan payments and get 50/50 rights to the vehicle.
What Incomes Are Accepted by Auto Lenders?
One of the more common types of income is W-2 income, or earned income from an employer, where you receive check stubs either weekly or biweekly. Generally, auto lenders prefer W-2 income.
Other income types include:
- 1099 income – Self-employment income. This can include freelance work, contract workers, or business owners. May be accepted by an auto lender with two to three years of supporting tax returns.
- Unemployment – Awarded to borrowers without work. Not acceptable by auto lenders, since it’s a temporary source of income. Lenders need proof that you can continue to receive income throughout an entire loan term.
- Alimony or child support – Awarded/unearned income. May be used to lower your debt to income (DTI) ratio, but typically can’t be used to meet a lender’s main income requirements. Usually proven with award letters and bank statements.
- Social Security and permanent disability – Awarded/unearned income. May be accepted by some lenders to meet income requirements or lower your DTI ratio, and proven with award letters and/or bank statements.
With good credit, a lender may not give too much thought to what your income type is. If you have poor credit, then you may have to meet more stringent requirements to qualify for a car loan.
Subprime lenders that assist borrowers with credit challenges typically require that you have around $1,500 to $2,500 of provable, monthly income.
If you don't have, or can't prove you have income, then you’re not likely to qualify for an auto loan with any auto lender, either traditional or subprime. However, some in-house financing dealers may be more flexible on income requirements.
Getting Ready for a Bad Credit Auto Loan
Having your proof of income is only one part of qualifying for a car loan. If your credit score is worse for wear, then you may need the assistance of a subprime lender signed up with a special finance dealership. These lenders specialize in credit challenges to help borrowers get the vehicle they need with bad credit.
Here at Auto Credit Express, we’ve created a coast-to-coast network of special finance dealers. Once you complete our free auto loan request form, we’ll look for one in your local area. Get started on the path to your next car loan with us today!