Can I Get a Bad Credit Auto Loan if My Income Is Social Security?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - November 27, 2019

If you’re in the market for a bad credit auto loan and Social Security is your only source of income, there are some things you have to be aware of. When dealing with bad credit, you’re more than likely going to be working with a subprime lender. Unfortunately, SSI income typically doesn’t meet their income requirements since it’s not taxable. You may need to go to a buy here pay here dealership to get a bad credit car loan with Social Security income.

Subprime Lenders’ Income Requirements for Bad Credit Auto Loans

Every lender has their own minimum income requirement. It's common for subprime lenders to require that you make at least $1,500 to $2,000 a month before taxes from one job.

You’re going to need to bring in proof of income and employment with a recent computer-generated pay stub showing year-to-date earnings if you’re a regular W-2 employee, or recent tax returns if you’re an independent contractor who receives a Form 1099.

You’re allowed to have multiple jobs or sources of income, such as Social Security, but you can’t combine these sources to meet the minimum requirement. You have to be able to meet the minimum income requirement with one single source of income.

However, the lender may include the additional income source(s) when they calculate your debt to income (DTI) ratio. This determines how much of your monthly income is being used to pay regular monthly expenses, including an estimated car and insurance payment.

It can be difficult to get approved for an auto loan if your income is Social Security because subprime lenders require your income to be taxable, which SSI isn’t. In order to get approved, you either have to have an additional source of income that can be taxed, or a cosigner or co-borrower that earns taxable income. Otherwise, subprime lenders are likely going to turn you down.

Buy Here Pay Here Dealerships’ Income Requirements

If Social Security is your only source of income and you have bad credit, you may have to work with a buy here pay here (BHPH) dealer. These places are a type of in-house financing dealership, which means they offer their own loans for the vehicles on their lot.

It’s typically much easier to qualify for an auto loan through a buy here pay here dealer, as most of them don’t run credit checks. Instead, your income and down payment qualifies you for a car loan.

Even better, they aren’t concerned with where your income comes from, or whether or not you have multiple jobs – as long as you can afford the payment, you’re usually golden.

However, since your credit score isn’t a factor in determining your approval, it also means that a dealership may not report your loan or timely payments to the credit bureaus. This means that you wouldn't be able to improve your credit score over time with one of these auto loans.

When you work with a BHPH dealer, your interest rate is going to be higher than average, which increases the overall cost of the loan. Plus, you’re going to be limited to financing a used vehicle, and a down payment is almost always required.

Ready to Find a Dealer?

As long as your work with the right lender, you can use your Social Security income to get an auto loan. Just be aware of the limitations and the rules of both subprime lenders and BHPH dealerships.

Once you feel you’re ready to get the car buying process started, CarsDirect is here to help. We can match you to a local special finance dealer that has the lenders available to assist people in unique credit situations. Fill out our easy and free auto loan request form to get started right now.


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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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