What a Govt. Shutdown Could Mean for Car Buyers

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Content Manager

Bethany Hickey is 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 - September 24, 2021

A government shutdown could be happening again soon, possibly within the next week. This happens when Congress runs out of money to pay their employees before the end of the fiscal year, and as a result, only the essential duties of government continue to run (such as fire departments, police, armed forces, and others).

For citizens, this could mean a pause in bankruptcy cases, issues with distributing unemployment checks, and many employees being furloughed.

Typically, when the government shuts down, government employees are furloughed and their pay is suspended. According to The Washington Post, this could mean many “essential” employees will continue to work, but are unpaid. Employees working without pay or furloughed without pay may likely be forced to drain their savings to stay afloat.

Additionally, it could mean consumers struggling to get things like passports, business loans, or immigration proceedings. And without flowing income, new credit, such as a car loan, is likely off the table while you’re furloughed or unemployed.

Typically, auto lenders don’t approve car loans for borrowers on unemployment or those that have been furloughed. Unemployment is considered temporary income that won’t last for the duration of a car loan, resulting in a loan denial letter in most cases.

Work history and income are two of the most vital pieces to auto loan eligibility. However, some lenders may be more willing to work with a furloughed employee, since their income is simply paused rather than outright gone – but these situations are looked at on a case-by-case basis.

Employees that are at risk of losing their income may need to consider delaying a car purchase until more concrete news of a government shutdown is released. Many lenders ask for proof of income going back 30 days. Contract and 1099 employees are likely to be asked to supply two to three years of recent tax returns, and as a result, may not be as affected by a government shutdown when it comes to buying a car.

To top it all off, inventory is short for new and used cars alike, and prices are high. Incentives for new vehicles change monthly, so shopping for a new car deal right now may not benefit you unless you're looking to buy in the next month.

The Washington Post points out that the last shutdown in 2018 “cost about $3 billion in economic activity.” That shutdown lasted for 35 days. Since we’re still in the middle of a pandemic, who knows the true economic impact of a government shutdown could be right now.

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, Content Manager

Bethany Hickey is 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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