When you’re struggling with credit issues and you need a vehicle, a down payment increases your chances of getting approved by a subprime lender. With that in mind, the coronavirus stimulus checks that are rolling out may be able to help you get into your next car loan.
Who Gets a Stimulus Check?
During the coronavirus pandemic, many Americans have been affected not only by the virus and the disease it causes, but by the temporary loss of their jobs. Due to the economic stress that this pandemic and shelter-in-place orders enacted by many states have caused, the U.S. government made the decision that Americans who qualify should receive a stimulus check.
The most an individual can be given is $1,200 if their adjusted gross income (AGI) is below $75,000. Married couples, if their combined AGI is less than $150,000, receive a maximum of $2,400. Those who qualify with any dependents under 17 receive $500 per child.
You can use our partner's calculator to estimate how much your stimulus check may be, and if you qualify. You can also consult the IRS’ website to get all of the specifics.
If you filed your 2018 or 2019 tax returns with direct deposit for the refund, and qualify for the economic impact payment, your stimulus check should simply be deposited directly in your bank account. If you don't have direct deposit set up, your check is mailed to you.
You also don’t need to apply for the stimulus check. Simply being an American citizen with a Social Security number, who meets the income requirements, is all it takes.
If you’re financially stable during these tough times, this stimulus check could help cover all or part of the down payment requirement for a bad credit auto loan.
Bad Credit Car Loan Down Payment Requirements
When you work with a subprime lender, you’re typically expected to have a down payment of at least $1,000 or 10% of the vehicle’s selling price, sometimes whichever is less. The down payment doesn’t have to be only cash. You can also use a trade-in with equity to help cover the down payment – or use both!
For many borrowers in all credit situations, saving for a down payment is one of the toughest requirements to meet. Proving your identity, providing your check stubs, and proving where you live is fairly painless, but coming up with at least $1,000 in cash can be difficult.
However, these stimulus checks that have been approved and sent to many Americans don’t have to be used for anything specific. This means you can use this cash to put toward a down payment on a car loan, and meet one of the biggest requirements of subprime lenders.
Other Common Bad Credit Auto Loan Requirements
Having a down payment isn’t the only requirement of most bad credit auto lenders. Here are the other most common stipulations you’re likely to meet:
- Income – Subprime lenders generally require a borrower’s minimum monthly income to be at least $1,500 to $2,000 before taxes. This can be proven with a recent computer-generated check stub with year-to-date income listed. Unemployment checks can’t be used.
- Residence – Typically, subprime lenders prefer a borrower with a stable residence history, meaning you’ve lived in the same area for a year or more. You can prove where you live with a recent utility bill or bank statement in your name.
- Working phone – Bad credit borrowers also need to have a working cell phone or landline phone in their name, proven with a recent phone bill. Prepaid cell phones usually aren't accepted.
- Identity – Proven with a valid driver’s license, with your current address listed.
These are the most commonly requested items. Just keep in mind that your lender may require more documents, depending on your personal situation, and that all lenders vary in what exactly they need.
Finding a Bad Credit Lender
Meeting the down payment requirement can be one of the biggest hurdles for any borrower looking to qualify for their next car loan, but the stimulus check can be your solution. If you have less than perfect credit, finding a bad credit auto lender may be even harder – but we want to help with that.
At Auto Credit Express, we’re teamed up with dealerships that work with subprime lenders through their special finance departments. We’re still working hard to connect credit-challenged borrowers to bad credit lenders, and we’re still doing it for free. To get started, simply complete our car loan request form and we’ll look for a dealer in your local area with bad credit auto loan options.