Getting a car isn’t always an easy task, especially if your credit is suffering. But, if your meet all the minimum requirements a subprime lender asks for, you could be driving in no time!
Minimum Income to Buy a Car
With bad credit, you have to prove you’ll be able to make the monthly car payments. The only way to do that is to show proof of your monthly income with computer-generated check stubs. Because not all lenders work with bad credit, you have to apply with a subprime lender. These lenders all have their own specific guidelines, but, generally, you have to show a minimum income of $1,500 to $2,000 a month, before tax, from a single job.
If you have more than one job, and neither one alone grosses $1,500, you may not qualify for financing as the income from two or more jobs can’t be combined to meet the minimum requirement. However, if one job does meet the requirement, the income from the second job may be added into your total income when the lender calculates your debt to income and payment to income ratios. These calculations help the lender determine that you’ll be able to make your car payments without compromising your ability to pay the rest of your bills.
Does My Time on the Job Matter?
The length of time you’ve been on your job does matter. You typically can’t qualify for a bad credit car loan after two weeks on a new job. Lenders need to see that you have stability, so they prefer you can show at least six months to a year on your current job and at least a three year work history with no major gaps in employment.
Minimum Down Payment Requirements
Even though you hear those commercials over radio and television advertising “zero money down,” don’t be so quick to believe the hype. Zero down doesn’t typically happen for people with less than perfect credit. But that’s not actually a bad thing. In fact, putting money down is a wise move.
When you make a down payment on a car loan, it shows the lender that you’re willing to invest in successfully completing your loan. A down payment also reduces the amount of money you borrow, which means you’ll pay less in interest charges.
Typically, subprime lenders require borrowers to put down at least 10 percent of the vehicle’s selling price, or $1000, whichever is less.
Additional Minimums to be Aware of
There are more qualifications you need to take into account when you’re preparing to finance a vehicle with bad credit. Most importantly, you should know that the minimum amount a lender will typically finance is $5,000. Vehicles should have no more than 100,000 miles, and be 10 years old or newer.
You also have to provide proof of your residency with a current utility bill in your name, proof of a working landline or contract cell phone in your name, and a minimum of six personal references. Though these things are usually required for all bad credit car buyers, your lender’s qualifications may vary.
Let Us Guide Your Way
If you need a vehicle, but aren’t sure you meet the standard requirements due to bad credit, let Drivers Lane help. Our advice and expertise can help you know what you need to prepare for to meet the minimum requirements for a bad credit car loan.
We work with a nationwide network of special finance car dealers that have lenders available to help people who are struggling with credit challenges. Don’t hesitate any longer! Fill out our no-obligation online auto loan request form to get the process started now!