Buying a Car without Taxable Income

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - July 16, 2019

When you have bad credit, it can be a struggle if you don't have a car. It can be especially tough when you need a vehicle to find a job, but you need a job to get a car – what are you supposed to do? If you don't have a traditional, taxable income, you may find yourself out of luck for a regular auto loan, but you still have some options.

The Buy Here Pay Here Dealer Option

Buying a vehicle without taxable income can be especially difficult when you have bad credit. This is because most auto lenders that work with credit-challenged car buyers – known as subprime lenders – require applicants to have a minimum amount of taxable income from a single source, typically W-2 or 1099 employment.

If you don't have this, but have another source of income such as multiple part-time jobs, social security, or other non-taxable income, you need a different solution for your car buying needs. In these cases, buy here pay here (BHPH) dealerships could be right for you. These dealers are also lenders, so they care more about how much income you have, rather than where it comes from.

BHPH dealerships don't have to rely on third-party lenders, and instead fund auto loans themselves. Because they're financing your loan, BHPH dealers are usually only concerned with how much income you have and if you can meet their down payment requirement.

These dealerships may also ask that you make payments in person, and it could be on a weekly or bi-weekly basis instead of monthly, but this may depend on your pay schedule.

By lending in-house instead of relying on third-party lenders, buy here pay here dealers don't need to check your credit, though some of them do. The downside to this is that these dealerships sometimes don't report your loan or on-time payments to the credit bureaus, which doesn't help you improve your credit score like a traditional subprime loan can.

Vehicles at Buy Here Pay Here Dealers

When you look for a car from a BHPH lot, you're only going to see used vehicles. You may find a gem, but it's going to depend on the situation and the dealer’s inventory.

Just because BHPH lots don't carry new cars doesn't mean they're not worth buying, it just means you should take extra care by having them inspected by a certified mechanic before purchasing.

Additional Options for Getting a Car Loan without Taxable Income

If you find yourself without the proper employment requirements to qualify for financing through a traditional or subprime lender, and don't want to purchase a vehicle through a buy here pay here dealership, there are typically two options that remain for getting a car loan.

The first additional option you can often try is adding a co-borrower to your loan. A co-borrower that meets the income requirements can sign the loan with you, and the lender can use their credit to base an approval on.

In this scenario, you're sharing ownership of the vehicle. However, after about a year or more of responsible loan payments, assuming your income situation has changed, you may be able to refinance the loan and remove the co-borrower so that you can take over ownership.

Finally, the last option that exists is to wait it out until you can meet the lender requirements for financing. For subprime lenders specializing in bad credit auto loans, that typically means having at least six months on your current job, and a minimum income of between $1,500 and $2,000 a month before taxes. You should also be able to show at least three years of work history with no gaps longer than 30 days between jobs.

Let CarsDirect Help

Whether you decide to go for it at a buy here pay here dealer, or you opt to add a co-borrower to your loan, you're going to need to work with the right dealership.

Rather than wasting time, money, and fuel driving all over town, just fill out CarsDirect's simple, no-obligation car loan request form, and we'll get right to work matching you with a local dealer that has the lenders you're looking for. What are you waiting for? Get started right now!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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