In our database, we have over 100 subprime lenders and each of these lenders maintains an average of 5 lending programs. With over 500 programs in total, there should be a program for almost every bad credit or low income car loan situation. These are the major factors lenders consider when you apply for a car loan:
Credit score and credit history length: Most lending programs take into account your credit score as well as the length of time you've been using credit. The higher the score, and the longer you've been using credit, the better. Lenders that incorporate the credit bureau score in their approval formula usually cut off around 525. If your score is less than 525, it is still possible to get approved for an auto loan
with a lender that does not use the credit bureau score in their formula.
Job time: Many subprime auto lenders look for you to have at least one year on the job. If an applicant does not have a year on the job, most lenders look for at least three years of continuous employment with only 2 to 3 employers (max) during that time period.
Income: Income requirements are especially important point if you're applying for one of the available low income car loans. And these requirements are known to vary widely according to each auto loan program. While most bad credit lenders prefer around $2,000 per month gross (before taxes) income, there are many programs with lower income requirements.
Debt to income ratio
: To calculate your debt ratio, take all of your bills, add them up and divide this number by your total pre-tax income. Most lenders prefer a maximum DTI ratio of between 40 and 50 percent.
Payment to income ratio: To calculate your payment to income ratio, divide your new car payment by your pre-tax income. Most lenders prefer a maximum PTI ratio that's between 15 and 20 percent.
Down payment: Most low income car loan
lenders require some form of down payment. If you have no money down and nothing to trade in, there are a handful of programs available, depending on other circumstances.
Approval killers: Also known as Automatic Rejections, these can vary by lender. Examples of some of these are listed below. It should be noted that these are not automatic rejections for all lenders. However, they are automatic rejections for some lenders:
Currently in credit counseling
A dismissed bankruptcy
Past due child support
Excessive tax liens
Once again, it should be pointed out that lenders are not the same. If you do not meet all the criteria for bad credit low income car loans mentioned above, there is still a good chance that you could qualify for a number of other lending programs.