Buying a Car with Bad Credit Loans for Retirees

Get Car Financing
Even with poor credit.

By

Contributing Writer

David Topham covers the automotive and auto finance industries as the Content Manager of Auto Credit Express who also contributes to CarsDirect. He was born and raised in Michigan and is a graduate of Michigan State University.


, Contributing Writer - December 16, 2016

Many people want to spend their retired years traveling. Others simply want to reward themselves with a nice vehicle after finally calling it quits. Luckily, there are auto loans available for retirees.

An auto loan is helpful because it allows the borrower to buy a vehicle with the cost spread out over a period of time. This can make such a major purchase easier to handle and it allows retirees to keep their savings intact.

However, a number of factors affect your ability to qualify for a car loan. Retirees also face unique challenges because they are no longer working. And if you are a retiree with bad credit, it can be even more challenging to get approved.

Bad Credit Loans for Retirees

The problem with buying a car with bad credit loans for retirees is that the most mainstream lenders will not approve applicants with damaged credit. When you have bad credit, you typically need to apply with a subprime lender. And, almost always, these lenders can only be accessed through a special finance dealership, as they only loan indirectly.

Although many retirees have a substantial amount of savings, and possibly even a fixed income, it can still be difficult to get approved for a bad credit car loan. There are two reasons for this. First, subprime lenders have income requirements an applicant must meet, and, secondly, they want a portion of that income to be garnishable.

Income Requirements

Subprime lenders typically require applicants to have a minimum gross monthly income of $1,500-$1,800. However, that is not the universal standard and it can vary from lender to lender. Also, they will calculate your debt to income and payment to income ratios to see how your income stacks up when a car loan is added to the mix.

These lenders will accept many fixed incomes sources, such as Social Security, disability, pensions, etc. However, they will also require proof of income, so expect to be asked to furnish documents that prove what you make.

However, even if a retiree meets the income requirements through fixed sources, they could still have trouble getting approved.

Garnishable Income

In addition to the income requirements, special finance lenders also need at least a portion of your income to be garnishable. This can be a problem for retirees, as most fixed incomes cannot be garnished.

They want a portion of your income to be garnishable in the event you default on the loan. Being able to garnish an income sources gives the lender the added assurance that any deficiency balance (the balance owed on the loan minus the value of the vehicle) will be paid, which is important to them because bad credit represents more risk.

If you are retired and don't have a source of garnishable income, you may need a cosigner in order to be approved for a bad credit car loan. Your cosigner would need to have good credit, meet the lender's income and debt requirements, and have a garnishable source of income.

Getting Approved

Getting approved for a bad credit loan can be tough for a retiree. Often, it can be a challenge just finding a dealership that can work with your situation, but CarsDirect has the solution.

We have a nationwide network of special finance dealerships that are experts in dealing with unique credit situations. We can help you get connected to one in your area if you simply complete our free and easy auto loan application.

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, Contributing Writer

David Topham covers the automotive and auto finance industries as the Content Manager of Auto Credit Express who also contributes to CarsDirect. He was born and raised in Michigan and is a graduate of Michigan State University.


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