For most people, going through a divorce is an extremely stressful and emotional time. It's also a time that brings a large amount of financial upheaval and has the potential to affect your lifestyle in ways you might not be thinking about or expect, such as causing a hit to your credit scores thereby decreasing the chances of getting approved for a loan.
According to a 2013 study by the Bureau of Labor Statistics, both parents work in 59.1% of married families with children. When you take that into consideration, this suggests that when couples split up, both sides are likely to take a significant financial blow to their income and credit rating.
The Factors That Make Buying a Car Difficult
When you go from a two income family to one with a single income, there are a few things that can negatively affect your chances for getting an auto loan approval.
- Reduction in income.
This is the biggest and most important factor to consider when you are considering a car loan. Since you have lost a significant part of the income that used to make it possible for you to make bigger purchases, you will need to rethink what you can realistically afford.
- Joint debt.
Are all of your debts as a married couple paid off? If not, these will influence your debt to income ratio, and possibly your overall creditworthiness. Even if your former spouse was awarded sole responsibility from the court if you had joint accounts, if both parties are named as account holders, each is still responsible for making the payments. If one party stops paying on an account, the credit scores of both will drop.
- Child Support or Alimony.
If you have been ordered by the court to make payments to your former spouse, this will reduce your income further, and can reduce the amount you can borrow for a car.
So, what are the solutions to these issues? Buying a car in the appropriate price range can help, as well as making the effort to either close or have your name removed from joint accounts and possessions. If your credit is less than perfect, you may need to find a car dealer who specializes in working with those with flawed credit histories.
Get the Help You Need
When you need assistance in finding a new vehicle to begin the next phase of your life, Auto Credit Express can help you. We work with a network of car dealerships that are experts in special financing and have helped millions with bad credit situations find the cars they need. All you need to do to get started is complete the online application. It's fast and easy and, from there, we will connect you with a dealership in your local area that can help you get financed.