What Are the Income Requirements for Bad Credit Car Loans?

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Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

, Content Manager - March 26, 2020

Having bad credit doesn’t have to stop you from getting approved for a car loan. However, there are other requirements you need to meet before you can be considered, so here’s what you should prepare for.

Income Requirements for Bad Credit Car Loans

Subprime lenders vary in their requirements when determining an approval for a car loan, but we’ve put together the most common rules for income and work history. Most insist that you have:

  • A minimum monthly income of $1,500 to $2,000
  • Computer-generated check stubs with year-to-date income that prove this
  • Consistent employment with at least one year at the same job, and no gaps longer than 30 days between jobs over at least the last three years
  • Part-time work can qualify, provided it meets the minimum income level and consistent income over at least three years

If your income is heavily reliant on tips, be sure that you’re reporting them – income that can’t be proven can’t be used to meet the monthly income requirement.

If you have more than one source of income, subprime lenders usually only consider your primary one, or the one that makes you the most money. But additional sources of income (such as alimony and Social Security) can be used to compute your debt to income ratio, which lenders use to determine your eligibility for a bad credit car loan, as well as if you can afford a monthly car and insurance payment.

Other Common Requirements

Because subprime lenders use more than your credit score for approval, they also require more than just your proof of income and credit reports.

For final approval, other common conditions include:

  • Valid driver’s license
  • Proof of residency
  • Proof of a working phone
  • A list of five to eight personal references
  • A down payment of at least $1,000 or 10% of the vehicle’s selling price

Your bad credit lender may require additional documents, depending on your personal situation. For instance, if you were recently discharged from a bankruptcy, be prepared to bring your discharge papers with you.

Many of the stipulations needed for bad credit auto loans are likely items you already have. To prove you have a working phone, bring your phone bill or cell phone contract. For proof of residency, bring a recent utility bill or bank statement in your name that lists your address.

To help prepare for car loan lending, you should also pull your credit reports which you can do yourself, for free, once every 12 months from each of the major credit bureaus: TransUnion, Experian, and Equifax. Use these reports to see if there are any errors or outstanding credit accounts that need to be addressed. You can view your own credit reports without affecting your credit score because this is called a soft inquiry – so you can comb through them without worry.

When a creditor or lender checks your credit reports, it’s called a hard inquiry, which can temporarily lower your credit score. But, if you inquire with multiple lenders for the same type of credit within 14 days, only one hard inquiry is reflected on your credit score. This means that you can rate shop without worry, as well.

Bad Credit Car Loans

When you apply for a bad credit car loan, there may be more requirements than you’re used to if you’ve had a traditional car loan. The extra steps are to set you up for success and be sure to help lenders get you the auto loan that is best catered to your personal situation.

To help you get ready for the process, it usually goes like this:

Once you find a dealership that works with subprime, or bad credit, lenders, you turn over your credit information to the special finance manager. From there, the finance manager chooses which lenders to send it to. If you’re approved, the lender then determines a payment range you can afford based on your monthly income and expenses.

The lender then sends a payment call to the dealer, which states the maximum monthly auto payment you’re allowed. You then work with the dealer, who helps you choose a vehicle from their inventory that fits within your budget and payment call.

After you choose a car, you finalize the paperwork with the dealership, and make any necessary up-front payments, such as the required down payment, and possibly tax, title, and license fees, as well. You then take delivery of your vehicle and can drive off.

In a way, the bad credit lending process is almost the opposite of what happens with good credit where you typically choose a car first, then apply for a loan. With a bad credit auto loan, the terms of the loan are set to your unique situation and income, which helps the dealer find a vehicle that works for you.

To get started, you need to collect some items and understand the requirements for special financing.

Where to Find Bad Credit Car Loans

Finding a subprime lender doesn’t have to be difficult, you just have to know where to turn – and you can start with us, for free. At CarsDirect, we’re connected with dealerships that work with bad credit lenders all over the country.

To get started, you only need to fill out this quick, free car loan request form. Once you submit it, we’ll get to work finding you a dealer in your local area.


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, Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

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