Income and Employment Requirements for Bad Credit Car Buying

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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.


, - December 9, 2019

When you need to buy a car as a bad credit borrower, it can be more difficult than financing a vehicle with good credit. Subprime lenders, who specialize in financing people with less than perfect credit, look at additional factors and not just your credit score to approve you the auto loan you need. Income and employment requirements are especially important when it comes to qualifying for a car loan.

Income and Employment Requirements

The requirements needed to get an auto loan as a bad credit borrower vary, but all subprime lenders have qualifications you have to meet. Of these requirements, income and employment often go hand in hand.

These factors have a few specific terms you need to be aware of:

  • Income – Most subprime lenders stick to a minimum income requirement of at least $1,500 and $2,000 a month before taxes. You must be able to prove that this is taxable income that comes from a single source. This means supplying your most recent computer-generated paycheck stub that shows year-to date income.
  • Employment – When it comes to employment conditions, not only do subprime lenders require your income to be from just one source, they have job-related qualifications. You typically must have been at your current employer for at least six months, and have an overall employment history of at least three years with no large gaps (over 30 days) between jobs.

What does this mean for you? Lenders are looking at your income and employment as a sign of stability. Since subprime lenders don’t solely rely on your credit for approval, they look in as many areas of your financial life as they can.

In all, these show them your ability to repay a loan, your employment stability, and your willingness to invest in your own success through a down payment (a requirement you generally can’t avoid with bad credit).

Income Questions to Consider

What happens if you meet the income requirements and have income from a second job? Is that income not even considered? Even though it isn’t used to help you meet the minimum requirement, secondary income can help decrease your debt to income (DTI) ratio.

If you have more than the required income from a second job or a passive income source, this money can still help you when added to your primary income when a lender calculates your DTI ratio.

Your DTI ratio shows a lender how much of your monthly income is used to pay your current bills, and allows the lender to see how much money you have available for a car loan.

However, what if you make enough money to meet the lender’s minimum requirement with multiple sources of income instead of a single job? In this case, you aren’t able to qualify with a subprime lender, but you may qualify for a loan with a different type of lender.

Alternate Bad Credit Buying Options

When you can’t qualify for a loan through a subprime lender, other options still exist: namely, going through an in-house financing dealership.

These places, also known as buy here pay here (BHPH) lots, operate independently as both a dealer and lender.When you go to a BHPH dealership, it’s not as important where your income comes from, as long as you can afford the monthly payment.

Be aware, however, that the trade-off for not having specific income or employment requirements are typically a larger down payment and a higher interest rate. Plus, BHPH dealers only carry used vehicles, so what you see is what you get, and each lot offers different cars.

Getting the Help You Need

Now that you know the standard income and employment requirements for subprime lenders, are you ready to get the bad credit auto loan you’ve been looking for? If you are, then you’ve come to the right place.

Here at CarsDirect, we have a network of special finance dealerships that work with lenders for bad credit situations. To help get connected to a local dealer near you, simply fill out our easy, fast, and free car loan request form today.

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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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