Low Income Car Loans

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How to Get a Car Loan with Low Income

You don't need to be rich to qualify for a car loan. In fact, there are many auto lenders who offer loans at a reasonable price point. However, most subprime lenders require a pre-tax monthly income of at least $1,500, but this amount varies. To start the process of getting your low income car loan, you should talk to a lender or car dealer to ask about their exact requirements. If you're not sure where to go, let Auto Credit Express help. We have a nationwide network of dealers that work with just about every credit situation. Start the process by filling out our auto loan request form and we'll get to work connecting you with a dealership near you.

Still not sure if a low income car loan is right for you? Review more of the common requirements most lenders have for an auto loan and get tips on how to improve your chances of getting approved below.

Tips on How to Qualify for Low Income Car Loans

You should take some time to prepare before applying for an auto loan. By having as much information as possible beforehand, you can make the car buying process easier for yourself. Make sure you do these things before heading to a dealership:

  • Look at your credit score and reports - The first thing you need to do is understand where your credit stands. You're entitled to a free copy of your credit reports every 12 months from the three major credit bureaus: Equifax, Experian, and TransUnion. Check to make sure that the information is up to date and accurate. If you see any errors, contact the reporting credit bureau to dispute it and have it fixed.
  • Set your budget - The next important step is determining your budget. 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 your car loan. You need to have an idea of the price of the vehicle, down payment amount, estimated interest rate, and expected loan term.
  • Save up for a down payment - After you've determined a monthly estimate, you should plan for a down payment. Lenders can require one in order to reduce risk, though it can be as small as a minimum of $1,000 or 10 percent of the vehicle's selling price, whichever is less. If you need more time to save up a reasonable down payment and you're able to wait, we recommend that you do so. The larger the down payment, the better your chances of getting approved and the lower your monthly payment and interest charges will be.
  • Consider a co-borrower - If your income doesn't meet the lender's minimum requirement, you can consider having a co-borrower on the loan. A co-borrower is a spouse that you can combine incomes with. Both of your names are listed on the title, and both of you are 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 must be a spouse.
  • Do some car research - When you have low income, you can expect your car choice to be limited. You probably won't be able to get the vehicle of your dreams, so it's important to be realistic when picking a car. Do some research on vehicle prices to find a few 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 needed documents if you plan to trade in your car. Some lenders may require additional paperwork depending on your credit, such as proof of income, proof of residence, or personal references. Ask your lender or dealer what they need from you ahead of time, and have them 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.

Is it Possible to Get a Low Income Car Loan with a Great Rate?

Yes, you can get a great interest rate on a low income car loan, but your credit has to be excellent in order to do so. Auto lenders mostly base your interest rate on your credit score, so your income has little to do with it.

Even though lenders factor in credit more heavily than income, they do consider overall risk when they're determining your interest rate. So, having a lower income may raise your interest rate, especially if you're not working with a lender that's prepared to deal with low income consumers.

One trick to getting the best rate you possibly can when you're in need of a low income car loan is to take as many money-saving steps as possible. Keep these tips in mind:

  • Your credit - Know where your credit stands before visiting a dealership. Knowing your credit score and what's in your credit reports allows you to stay in control. Make sure to research common interest rates among people with similar credit scores so nobody else can define your creditworthiness for you.
  • Down payment - Make the largest down payment you can afford. This lowers your interest charges by lowering the amount you have to finance, and may even make it possible for you to shorten your loan term to save even more.
  • Vehicle type - Remember that new cars typically carry lower interest rates than older models. They also tend to be more reliable and are covered by a manufacturer-backed warranty. The same can be said for cars with lower mileage compared to vehicles with higher miles on them.
  • Purchase price - Be sure and negotiate based on overall purchase price when you're talking to a dealer. If you negotiate only for lower monthly payments, your loan term may end up being so long that you pay more than you bargained for in the long run due to interest charges.
  • Cosigner - Have a cosigner on your loan. Even if the lender doesn't require one, having someone on the loan with excellent credit and a good income can put your lender at ease, and perhaps get you a lower interest rate.

If you're a subprime car buyer, you may not qualify for a great interest rate. Subprime buyers often find that lenders compensate for the additional risk of poor credit with higher interest rates. While it'll be higher than other interest rates, it may still be less than you think, depending on your situation and the lender you're working with. The only way to know for sure what rate you'll be offered is to talk to a local low income car dealer near you.

Car Loans Based on Income, Not Credit

If you're looking for a car loan, but your credit isn't stellar, chances are you need a subprime loan. Subprime lenders help people in all kinds of challenging credit situations, such as bad credit, no credit, and even bankruptcy. Not all dealers work with these types of lenders, but we here at Auto Credit Express know where to send you to get you back on the road.

But what if you aren't willing to take a chance on your credit? Is there a way to get a car that's based on your income, and not your credit? Well, you're in luck. There are dealerships that do in-house financing - sometimes called buy here pay here or tote the note dealers - that don't check your credit to qualify you for an auto loan. All that's usually required is proof of a steady income and a down payment.

At these car lots, the dealer is the lender. You can often pick out a vehicle, complete the paperwork, and be on your way all in the same day. However, these types of dealers may not report your loan or payments to the credit bureaus, so it won't help you improve your credit. But if you need a car quickly and are concerned about your credit, this is a way to get an auto loan based on only your income.

Other Ways to Help Get a Car with Low Income

Having access to a vehicle is often necessary in order to get to work, school, or wherever you or your family need to be. High car prices can be a barrier for low income families and individuals, but there are other ways you can get a vehicle.

A number of states and counties offer grants for low income families to buy a car. There are state assistance programs that provide funding directly to families to help them buy a vehicle, while others provide loans for the purchase of a car - often at lower interest rates than you'd normally qualify for at a bank or credit union. In addition, you can look into vehicle donation programs with charities and non-profit organizations. They often make donated cars available to consumers who are low income earners, unemployed, or dealing with a disability.

If you're trying to get a car loan with low income, you can look into these assistance programs or donation programs, or check for grants for low income families. Another option, of course, is applying for an auto loan with a special finance car dealership - including those that Auto Credit Express works with on a daily basis. These dealers are signed up with lenders that understand and know how to work through unique situations.

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