Qualifying for a bad credit auto loan
So the first question you may be asking yourself is, “what do I need to have in order to qualify for a bad credit car loan?” That’s a good question. While most situations are unique and no individual is alike, as a general rule, the following are basic qualifications that will, at least, give you a good chance of getting a bad credit auto loan:
- Monthly income between $1,500 and $1,600 per month. This is about the lowest income level you can have if you want to get a loan. While you still have options if your income is lower, they will be few and far between. So if your income is too low, you’ll need a cosigner or, perhaps to take a second job to increase your monthly income.
- Full-time employment (not seasonal). People who are not employed full time can have difficulty getting a vehicle loan. And, even if you’re working full time, if that work is seasonal (such as working in a retail store during Christmas time), you may have difficulty getting a car loan.
- Legal residency. In most cases, you’ll need to be a legal resident of the United States. If you are not a legal resident, you will probably have trouble getting a loan for a vehicle.
- Currently reside in the United States. In most cases, you’ll also need to reside (have a home) in the United States for you to be considered for a loan. Most of the time, you’ll need to provide proof of residency to get your financing. You will also probably need a working phone number as well.
- Currently having, or able to obtain, auto insurance. If you do not have car insurance, a lender is unlikely to loan you money on a vehicle. There’s just too much risk for the lender if the vehicle is totaled in an accident. Note that it is also illegal to not carry certain types of auto insurance.
You may also want to know things that may prevent you from qualifying for a bad credit car loan. Some of these are noted below:
- Seasonal/temporary employment. As noted above, this type of employment may prevent you from getting a bad credit auto loan. The way to fix it is to get a full-time job and make sure it’s a job that you can work year round.
- Being paid “under the table”. This is where a person is paid cash (by an employer) in order to avoid paying taxes. Besides being illegal, you won’t be able to provide proof of income with this type of income. So don’t do it. It isn’t worth it in the long run.
- People with a recent repossession. In general, this will make it more difficult to obtain an auto loan. If the repossession was included in a bankruptcy, that will actually improve your chances of getting a loan.
- Military personnel stationed outside of North America. If you are in the military and you are stationed outside of North America, it will be very difficult to obtain a car loan.