Car Loan for Low Income Earner

Car Loan for Low Income Earner – How To Get One?

Almost all lenders offering car loans for low income earners review the credit report and the duration credit has been used. With cars becoming a necessity, there are more people wanting to own cars. Whether you have bad credit or are looking for car finance for low income, there are programs that can get you the necessary financing you are looking for.

If you know the major factors that lenders consider while approving a car loan with low income, you will be better prepared and hence more likely to get approved. The first and most important factor is your credit score. Almost all lenders offering car loans low income earners review your credit report, as well as the duration credit, has been used. The longer the duration, the better it is. Usually, the lenders that incorporate the credit scores from bureaus have a cut-off score of 525. With a score lesser than this, you will likely get car finance with lenders that do not use bureau scores.

Another factor, that plays a crucial role in getting approved for low income car loan, is the time at your current job. The longer you have been working at your current employer, the better your chances of approval. In the worst case, you should have spent at least one year on the job. If you do not have even that, then the lenders will consider a maximum of two to three jobs in the last three years.

Since you are looking for car loans, income is an important factor. The income requirements can vary from one lender to the other. Most lenders require you to have a gross (pre-tax) monthly income of at-least $2,000. However, there are some other financing programs as well as lenders that may be willing to approve car finance for low income at lower monthly incomes.

A debt-to-income (DTI) ratio between 40 and 50%, and payment-to-income (PTI) ratio between 15 and 20% can make you an attractive customer for car loan. To calculate DTI, add up all your monthly expenses and divide by your monthly gross income. To calculate PTI, divide the price of the car by your gross monthly income.

A large down payment will not only enhance your chances of approval for a car loan but may also help you get lower interest rates. You can choose to trade-in your old car in lieu of down payment, if you do not have enough funds.

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