Can You Finance a Car with Bad Credit and No Job?

Get Car Financing
Even with poor credit.

By

Contributing Writer

Amy Fortune is a contributing writer for CarsDirect and lead writer/editor for AutoCreditExpress. She also contributes regularly to several other high-traffic blogs. Amy was born in North Carolina and grew up with an appreciation for NASCAR and everything automotive. Now based in the Motor City, she continues to be happily immersed in car culture and automotive finance.


, Contributing Writer - December 16, 2016

If you're looking to finance a car with bad credit and no job, it may not be easy. If an applicant has good credit, lenders probably won't be concerned with where their income is coming from. However, for bad credit buyers, the income requirements that must be met are more restrictive.

Of course, a person with no job can still have an income source. Many unemployed individuals receive disability or social security benefits, alimony or child support. But even if a bad credit buyer can prove that they regularly receive income through one of these sources, they may still have trouble getting approved for a car loan.

Different Types of Income: Qualifying vs. Non-Qualifying

In order to meet the requirements of most special finance lenders, you need to provide proof that you earn a qualifying income. Normally, for an income to qualify, it must be at least $1,500-$1,800 a month and garnishable. This assures the lender that you have the means to pay back the loan or, if you don't pay, they'll have a way to recover their money.

Income that is earned through disability or social security benefits, alimony or child support is not garnishable. Therefore, even if an auto loan applicant with bad credit meets the minimum income requirement through one of these sources, they will still most likely not qualify for financing. However, if they can find a cosigner with good credit and a garnishable income, they might get approved.

Using a Cosigner to Finance a Car with Bad Credit and No Job

If the type of income you have does not meet special finance lender requirements, having a cosigner can help. A cosigner is someone – usually a close friend or family member – who agrees to share responsibility for a loan with you.

As long as an individual has both a qualifying income and credit score, they can cosign a loan. Just remember that if you ask someone to cosign, you’re requesting a very large favor. Once they sign the loan contract with you, they are agreeing to pay for the loan if you should ever default. Also, their credit will be negatively affected if you make a late payment or stop paying altogether. Finally, having your loan on their credit report may affect your cosigner’s ability to get approved if they need to apply for a loan or line of credit in the near future.

If you can't find a cosigner or don't want to use one, there is one other option to explore. If you have bad credit and no job, but earn a regular income from another source, a buy-here-pay-here dealer will probably be able to finance you.

The Buy-Here-Pay-Here Dealership Option

Buy-Here-Pay-Here (BHPH) Dealers handle all of their financing in-house. They don't use the services of third-party lenders, so they normally don’t even run credit checks on buyers. In order to qualify for a BHPH program, you only need to produce a valid driver’s license and documentation that verifies your income. This makes these types of dealerships a good last resort option for bad credit buyers who don't qualify for special financing.

With a BHPH purchase, however, you need to understand that there are certain drawbacks. For example, there's a good chance that you will end up paying more for the car you buy than it is actually worth. You may also be expected to make your weekly or biweekly payments in person at the dealership. In addition to these inconveniences, many buy-here-pay-here dealers do not report positive payment activity to the credit bureaus. And if this is the case, you won't have an opportunity to improve your credit while paying for your vehicle.

If you come to the conclusion that going to a BHPH dealership is your best (or only) option, you should try to find one that does report payments to at least one credit bureau. This way, after you've made all of your payments on time, your credit score may be significantly higher. With your improved credit score, you may be able to finance your next car with better terms and conditions.

Taking Advantage of the Possibilities

Even if you don't think that you can get approved for an auto loan, CarsDirect may be able to work with your situation. We are connected to dealerships throughout the U.S. and Canada that have the right kinds of lending resources for bad credit car buyers.

Because applying with us costs nothing and is obligation-free, there's no reason why you shouldn't give us a try. You may be pleasantly surprised by what we're able to do for you. Just fill out our simple and secure 1-Step Auto Loan Application to get started today.

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, Contributing Writer

Amy Fortune is a contributing writer for CarsDirect and lead writer/editor for AutoCreditExpress. She also contributes regularly to several other high-traffic blogs. Amy was born in North Carolina and grew up with an appreciation for NASCAR and everything automotive. Now based in the Motor City, she continues to be happily immersed in car culture and automotive finance.


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