Auto Loan Options for Low-Income Borrowers
Auto loan options for low-income borrowers include programs through subprime lenders at special finance dealerships, and through in-house lenders such as a buy here pay here car lot. We strive to do this by helping people repair damaged credit through realistic opportunities for auto loan approvals. We do this for everyone, even if they have not had the best track record in the past or have gone through a bankruptcy.
Tips to Improve Your Approval Odds
To improve your approval odds, you should take some time to prepare before applying for an auto loan. Having as much information as possible can make the car-buying process easier. Make sure you employ these tips before heading to a dealership:
Check your credit reports and score - You're entitled to a free copy of your credit reports every week from the three major credit bureaus by visiting annualcreditreport.com. If you see any errors, contact the reporting credit bureau to dispute them and have them fix your credit report.
Set your budget - You need to know what you can afford to spend on a car loan. A great tool to use is our Auto Loan Monthly Payment Calculator. This gives you an estimate of how much you can expect to pay each month for a car loan of varying sizes.
Make a down payment - You should plan for a down payment. Lenders often require one to reduce risk, though it can be as small as $1,000 or 10% of the vehicle's selling price, depending on the lender. If you need more time to save a reasonable down payment and you're able to wait, we recommend you do so.
Consider a co-borrower - If your income doesn't meet the lender's minimum income requirement, you can have a co-borrower on the loan. A co-borrower is a person with whom you can combine incomes. Both of your names are listed on the title, and you're both responsible for payments. Combining incomes can be a great way to get approved for a car loan, but the tricky thing is that a co-borrower is typically a spouse due to the shared income.
Research vehicles - When you have a low income, you can expect your car choice to be somewhat limited. Research vehicle prices to find some that fit your budget, then you can look into the different features they offer, reliability ratings, and other reviews to find a car that meets your needs.
Have all documents ready - Make sure you gather all of the required paperwork to bring to the dealer or lender. This can include proof of auto insurance, a valid driver's license, and any necessary documents if you plan to trade in your car. If you have poor credit, you may require additional paperwork. Ask your lender or dealer what they need from you ahead of time, and have it on hand when you're ready to take out the loan.
Even if you have a low income, you may still be able to qualify for a car loan. The trick is to know what to expect and come prepared.
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