When you need a car loan with low income it can seem like it will never happen, and the more the application is turned down the more discouraged you get. There are lenders out there for people with low incomes. It may not be easy but it can be done. Here’s how:
Step 1: Get a Copy of Your Credit Report
When shopping for a low income car loan knowing exactly what is on your credit report can be invaluable. The lenders will use this information to determine whether or not to grant the loan. You will need to dispute anything you find on it that is not yours and anything that may be out of date before looking for a loan. That way you can improve your credit score a little bit before the hunt starts.
Step 2: Look for the Loan
When looking for a low income car loan your best chance is to secure the loan first. A lot of people make the mistake of shopping first for the car and then are disappointed when they cannot get the loan to pay for it. If you get the loan first you will know exactly how much can be spent on the car and thus help sticking to the budget.
Step 3: Make Sure to Have All of Your Paper Work
It is best to have all the paperwork done in advance in order to secure the loan. Proof of any additional sources of income is very important. If you receive income from court-ordered child support or Social Security which is not to be disclosed in a general scenario, however you may need to in order to get the loan.
Step 4: Collateral
If you have anything of value that can be used as collateral for the low income car loan it will be a good idea to ask your lender if they can take that as collateral. Although the car itself is usually collateral, the lender may take an additional form of collateral to secure the loan also.
Step 5: Shop
Look around for the best deal. Dealers often have sales and special programs you may qualify for. But you will need to actually take out the time and shop to find them. Ask the dealership about special programs for low incomes.
Step 6: Cosigners
You may need to use a cosigner. A cosigner is someone who will promise to pay back the loan in the event that you do not. However, when using a cosigner the other person will get the points on their credit, and not you. It is advisable to avoid using a cosigner when you can so you can build your own credit. A good payment history and credit report will allow you to trade the car you buy now in for the one you really want later.
Step 7: Down Payment
You may need to put a larger amount down when looking for a low income car loan. Some lenders can require as much as 30% down before they will grant you the loan.