Special finance lenders are able to approve bad credit car buyers by looking at factors beyond their credit scores. These types of lenders usually consider an applicant's income, residence stability and job history when making an approval decision.

For most special finance lenders, the minimum income requirement is $1,500-$1,800 (pre-tax) per month. This qualifying income must also be regular, garnishable and it should come from a single source. However, if you don't think that you will be able to meet the typical income requirement for a bad credit auto loan, there is a way that you might still be approved.

How Co-Mingled Funds Help Bad Credit Car Buyers with Low Income

Bad Credit Car Loan

First of all, make sure that you're looking at your gross (pre-tax) income per month. This is the number that will count with lenders, as opposed to your net (post-tax) income. You may discover that you actually do meet the minimum income requirement for special financing.

If, however, it still looks like you're coming up a little short, there might be another option. If your spouse earns a dependable income, they may be able to act as a co-borrower on the loan. In this case, your available funds would be co-mingled. This would give you a much better chance at meeting the minimum income requirement.

With this in mind, you should remember that your co-borrower will share responsibility for the car loan with you. The two of you will be in this together. This is why you should be 100% sure that a monthly car payment will fit into your household budget before committing to the purchase.

Budgeting for a Bad Credit Car Loan with Low Income

The reason that special finance lenders have a minimum income requirement is to ensure that applicants can afford to make a monthly car payment and pay for auto insurance. Otherwise, you could run into trouble and end up damaging your credit even further.

So, before committing to a vehicle purchase, sit down and carefully review your monthly expenses.

  • Write down the amount that you bring home every month.
  • Next, add up your monthly bills and expenses.
  • Subtract the bills and expenses total from your expected income total.

The amount that remains is your expendable income. However, you shouldn't plan on allowing all of this money to go toward a car payment and insurance. That would be stretching your budget too thinly. Instead, it's always a good idea to allocate at least a little money every month toward an emergency fund. With extra cash set aside, if an unexpected expense comes up, (such as a necessary car repair), you'll be prepared.

If you don't use your emergency fund during a particular month, this money can then go into your savings. Growing a substantial savings account is your best insurance against any problems that might come up in the future. After all, if you're trying to improve your credit and your financial situation, you don't want one unexpected expense to undo all of your hard work.

Bad Credit Car Loan Assistance for Unique Situations

If you have bad credit and need to buy a car, Drivers Lane can help. We've been assisting car buyers with credit issues for nearly two decades, so we can work with almost any situation. We can match you with a dealership in your area that can give you a better chance at auto loan approval. You may, in fact, even be able to purchase your vehicle with little or no money down.

It costs nothing to apply with us, and our service is obligation-free. So, go ahead and fill out our simple and secure online application to get started today.