Obtaining a Car Loan on Disability
If you have bad credit, it is still entirely possible to get approved for an auto loan. There are lenders out there that are willing to look at factors beyond your credit score in order to get you financed. However, these special finance lenders still have certain requirements that must be met. Most of the time, bad credit car loan applicants will need to produce proof of identification and qualifying income verification.
If you receive most or all of your income from disability benefits, you may technically meet the minimum income requirement. However, the payments that you receive every month will not count as qualifying income on their own. So, in order to get approved for a special finance car loan, you will need to do one of two things. You must either prove that you have an additional income source or get a co-signer.
The Basics of Getting a Bad Credit Car Loan on Disability
- Disability income does not count as qualifying income because it cannot be garnished. Lenders need proof of a garnishable income because they need to know that they can recoup their money if you default on your loan.
- If you receive wages from a regular part-time job, this income can qualify you for loan approval because it can be garnished. Generally, the minimum income requirement for special finance lenders is $1,500-$1,800 (pre-tax) per month. So, if you earn at least this much from part-time employment, you can meet this requirement. Or, lenders may accept your application if your benefits and your job income add up to the qualifying amount.
- The income that you receive from disability income will only count toward the minimum income requirement if you have been receiving payments for at least six months. You will also need to prove that these benefits will last through the term of your loan.
- If you do not have an additional, garnishable income, you may still be able to get approved for a bad credit car loan if you have a co-signer. A good co-signer candidate would be a close friend or relative with a qualifying income who is willing to share responsibility for the loan with you. Just keep in mind that your co-signer would be putting their credit on the line in order to help you out. So, this is not an arrangement that should be taken lightly by either party.
- Even with no garnishable income and no co-signer, you can still purchase the vehicle you need. As a last resort, a buy-here-pay-here (BHPH) dealer is usually an option. BHPH dealers typically do not run credit checks because they do not outsource their financing to third-party lenders. Instead, they do all of their financing in house. However, because of this, many BHPH dealerships do not report loans or payment activity to the credit bureaus. So, if possible, find a dealer that will report your timely payments so that you’ll be able to improve your credit while paying off your car.
Getting a Better Chance at Auto Loan Approval on Disability
If you’re in a tough credit situation, Smart Car Loan will do everything possible to improve your chances at auto loan approval. Even if you have bad credit and other special requirements to consider, we can match you with a dealership in your area that can work with your situation.
Even if you’ve been turned down by banks and credit unions, we connect you to the resources than can make financing possible. Our service is fast, free and comes with no obligations. And because we have a nationwide network of dealers to consult, you won’t have to travel far to get back on the road.
Go ahead and fill out our simple and secure online application to get started today.