If you aren’t currently employed, you may be wondering how you can get a car loan. Financing isn’t easy to come by, especially if you have bad credit and all or most of your income comes from sources such as social security or disability. But, don’t give up hope – difficult doesn’t always mean impossible.
Income and Employment Requirements for Getting a Car Loan
There are a lot of factors involved when you need to get financed for a vehicle. The type of auto loan you qualify for depends heavily on your credit score and your ability to pay.
If you have good credit, lenders are less concerned with where your income comes from and more concerned with if you can afford the payments. On the other hand, if you’re struggling with credit issues, a lender wants to make sure your income is from a garnishable source. In most cases, if your income can’t be taxed, it can’t be garnished (taken by an entity that you owe money to).
Sources of taxable income include:
- Employee – As an employee, you receive a year-end W-2 and payroll taxes are automatically deducted from your checks.
- Independent Contractor (Self-employed) – As a self-employed independent contractor, you get a year-end Form 1099 from your employer(s) and are responsible for paying all employment taxes to the government yourself, usually on a quarterly basis.
Sources of non-taxable income include:
- Social Security (SSI)
- Social Security Disability (SSDI)
- Child Support
While most of these non-taxable income sources can be added to pre-tax income along with wages to help a lender determine if you can afford a monthly car payment, none of them have the ability to stand on their own with a lender. This is even true at a special finance dealership. You should also know that if you receive unemployment income, it won’t be counted as income.
So, how can you expect to finance a vehicle with no job? One possible way you can is through a buy here pay here (BHPH) dealer.
How BHPH Dealers are Different
If you don’t currently have a job, you may need to visit a BHPH dealership to find the financing you’re looking for. These dealers are also lenders, and don’t rely on outside sources to provide you with a loan. Even though they still require you to have some form of income, they’re not so strict about where it comes from.
Though a car from a BHPH dealership may get you through, you should know that these dealers typically deal in older model used vehicles, and the loans usually come with very high interest rates. Plus, you may have to make your payments in person, sometimes on a weekly or bi-weekly basis.
Cosigners or Co-borrowers Can Help
Another possible option is to have a cosigner or co-borrower with a garnishable income. If your income meets the requirements but doesn’t come from a taxable source, having a cosigner available that meets this requirement could tip the scales in your favor. The cosigner agrees to “lend” you their proof of garnishable income for the purpose of approval, and agrees to make any payments in case you can’t, but they don’t have any rights to the car.
A co-borrower, on the other hand, has equal rights to the vehicle, and is typically a spouse. In this case, a lender looks at the income for both parties, and lumps them together to ensure there’s enough to qualify for a loan.
Getting Started on the Right Path
If you don’t have a job but still need a car, there are options out there and Auto Credit Express wants to help you find the right one from the start. Once you’re ready to get financed for a vehicle, we can help match you to a local special finance dealership that has the lenders available to help people who find themselves in unique credit situations. Simply fill out our easy, fast, and free auto loan request form to get started right now!