It’s not uncommon for Los Angeles residents to have two jobs, but this can play a role in whether or not you can get an auto loan. If you need a car loan and have bad credit, you have to meet the lender's minimum income requirement. Additionally, this amount typically has to come from one job. If you don't earn enough to meet the minimum income requirement with a single source, you may not be able to qualify for a bad credit auto loan without some extra help.
Bad Credit Car Loan Income Requirements in LA
When you have bad credit and live in Los Angeles, you’re going to want to work with a subprime lender. These lenders offer loans through special finance dealerships, and know how to handle various bad credit situations.
These lenders have an array of requirements you need to meet, and one of them includes a minimum income level. Subprime lenders generally require a minimum income of around $1,500 to $2,000 a month before taxes from one job.
You also need to bring in proof of income with a recent computer-generated pay stub showing year-to-date income if you’re a regular W-2 employee, or recent tax returns if you’re an independent contractor or self-employed.
What about if you have a second job? As we mentioned, you have to meet the minimum income requirement with earnings from one job. However, a lender is more than likely going to consider all of your income sources when they debt you out.
When a lender does this, it means they’re calculating your debt to income (DTI) and payment to income (PTI) ratios. These look at how a car loan fits in your budget considering your monthly income. You can calculate your DTI and PTI ratios yourself ahead of time to see where you stand.
For your DTI ratio, add up all your monthly bills – plus an estimate vehicle and insurance payment – and divide the sum by your pre-tax monthly income. As long as your DTI ratio is no more than 45% to 50%, you’re in good shape.
For your PTI ratio, add together your estimated car payment and insurance payment and divide the total by your pre-tax monthly income. This ratio should be no more than 15% to 20% if you want to get approved with a subprime lender.
How to Get a Car Loan with Low Income
If you find you don’t meet the minimum income requirement from one job, your next option for getting approved is to add a co-borrower to the auto loan. Not to be confused with a cosigner, co-borrowers are generally a spouse and share ownership of the vehicle.
The advantage to this is that you can combine incomes with a co-borrower that is your spouse. This means you can meet the minimum income requirement together, which could help you qualify for the car loan.
Plus, if your co-borrower has excellent credit, you might even qualify for a better interest rate, which means you can save even more money on the overall cost of the loan.
Be aware, though, that the only way to remove a co-borrower is to refinance and qualify for the auto loan on your own. You can read about refinancing and removing or adding co-borrowers here.
Find a Dealership in Los Angeles
Meeting the minimum income requirement is just one of many things you have to do to qualify for a bad credit car loan in Los Angeles. However, it’s also one of the most important requirements, and is a big deciding factor for an approval.
When you’re ready to get the auto financing process started in the City of Angels, Auto Credit Express is here to assist. For over 20 years, we’ve been helping credit-challenged consumers find car loans by connecting them to local dealers in LA and across California. We want to help you, too – fill out our quick and free auto loan request form to get started today.