How Much Income Do I Need to Qualify for an Auto Loan?

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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.


, - May 10, 2018

All lenders have income requirements a borrower needs to meet in order to qualify for an auto loan. The amount varies by lender, and whether the borrower is dealing with credit issues.

Minimum Income Requirement

For subprime lenders, the typical minimum income requirement is between $1,500 and $2,000 a month, before taxes. Remember this minimum varies by lender as well as loan programs they offer. The main thing to keep in mind is the more income a borrower makes, the better their chances of being approved are. Also, know that the income requirement will need to come from one source, and any additional income such as Medicare and social security aren’t included. So, if a borrower has two jobs, only the income from the highest earning job will be used.

In order to prove a borrower meets the lender’s minimum income requirement, they’ll need to show some proof with documentation. A borrower should bring their most recent computer-generated pay stub that lists their year-to-date earnings.

Debt to Income and Payment to Income

In addition to a minimum income requirement, a lender will use two ratios to determine if the borrower is able to qualify for a loan: their debt to income (DTI) and payment to income (PTI) ratios. Both look at a borrower’s monthly income, but determine different aspects of a borrower’s current financial situation. DTI and PTI will take into account any additional income, so if a borrower has more than one job or an additional source of income, these calculations will also include that income.

DTI ratios are calculated by taking a borrower’s bills and dividing them by their gross (before taxes) monthly income. The DTI ratio determines just how much of a borrower’s income is being used toward regular bills and expenses, and lenders generally look for a ratio that’s no more than 45 to 50 percent of their gross income – including a potential car and insurance payment.

PTI ratios are calculated by combining a borrower’s estimated monthly car and insurance payments, and dividing that by their monthly income. It’s important that a borrower doesn’t spend too much money on a car loan, and lenders will generally set their maximum ratio between 15 to 20 percent.

Bottom Line

Car loans can get expensive, and sometimes you aren’t able to qualify for a car loan based on a lender’s income requirement. Finding the right lender to work with you can be a challenge, and that’s why we at CarsDirect want to help.

We work with a nationwide network of dealers that have the lending resources available to help consumers with no credit, bad credit, and even bankruptcy. All you have to do is take the first step by filling out our online auto loan request form today.

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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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