Having enough income is vital when you need a car loan, and your job history is also important to bad credit auto lenders. Do you know the common job history and income benchmarks that many subprime lenders use when you apply for a car loan?
Work History Requirements for Bad Credit Auto Loans
If you apply for subprime financing at a special finance dealership, expect to need some documents with you to prove you’ve got what it takes to pay for a vehicle. The special finance manager is probably going to ask about your employment history for the last few years, too. Work stability is a good indicator that you can complete the loan!
Most subprime lenders require that you’ve been at the same job for at least six months to one year. You should also have a work history that’s at least three years long, without large gaps in between jobs. Most lenders consider a large gap as 30 days or more. If your current job is your first job, they may require that you’ve been there for at least one year.
There are some circumstances that auto lenders may consider when it comes to a new job or if you switch jobs often. For example, if you recently took a position as a dentist in a new city, but you’ve been a dentist for over five years, a subprime lender may be more understanding since you're working in the same field.
Another common example of a special situation a car lender may accept is that of a contractor, who may change employers frequently, but stays within the same field of work. A lender may be more understanding of some job situations such as this, so be open with the special finance manager about your work history.
Proving Your Work History and Income
Proving your work history can be done a few different ways. The lender or special finance manager may call your employer to verify employment, or you can request employment verification from your human resources department.
If you can’t prove your work history with either of these options, your lender may rely on your credit reports, a background check, or simply ask for copies of your tax returns for the last two to three years.
To prove your income, expect to bring your more recent computer-generated check stub that also shows year-to-date income. If you don’t have W-2 income (where you work for someone else) and you have 1099 income, instead, your tax returns from the last two to three are likely to be required.
Many people wonder if you can use your bank statements to prove your income. While bank statements can prove you have cash, it doesn’t prove that your income is being reported or tell the lender where that money is coming from.
How much income do you need? Subprime lenders typically require a minimum monthly income of around $1,500 to $2,500 before taxes. When you apply for financing, be sure to list your gross monthly income – not your net income. Additionally, only one source of income can be used to meet the minimum monthly income requirement.
What if I Don’t Have a Job?
Without a job, you may find it more difficult to get approved for a subprime auto loan. However, if you still have steady income from other sources outside of traditional employment, you may still qualify for financing.
Some subprime car lenders may accept some forms of fixed income to satisfy income requirements. Lenders may accept alimony, Social Security benefits, child support, permanent disability payments, and other fixed income types. Typically, you have to prove that you’re receiving this income for the entire duration of the auto loan that you’re applying for.
Temporary income, like unemployment, isn’t accepted by any auto lender. Any income that you claim is going to be used to pay for the vehicle needs to last for the whole loan term.
Special Financing Car Dealerships
To apply for a subprime auto loan, one of the easiest ways to do it is by finding a special finance dealership that’s signed up with subprime lenders. So, where do you find these dealers with bad credit lending resources?
You could drive or call around in your area, or, you could fill out our car loan request form and we’ll look for a dealership for you. Here at CarsDirect, we’ve created a network of dealers all over the country, and we match borrowers to them at no cost. Get started today!