Car Loan While Unemployed

February 25th, 2022 by

It can be exciting to purchase a vehicle, but if you’re currently unemployed, the idea of getting a car loan might be daunting. While it may seem nearly impossible to successfully secure a loan without a job to fall back on, there are methods you can use to make yourself an attractive loan candidate. At your North Coast Auto Mall, we want to make owning a car a reality. Read on to learn some things that you can consider to get one step closer to driving away in your dream ride.

Other Sources of Income

A jar of assorted coins tipped over

Money” licensed under CC BY 2.0 via Flickr by free pictures of money

While you may not currently have a job, that doesn’t mean that you can’t keep track of other income streams to boost your car loan application. If you’re earning money from alimony, rental properties, pension, social security, trust funds, veterans affairs benefits, investment dividends, or any other source, this can demonstrate to a lender that you will be able to pay back your loan. Even if it’s not from a regular job, a steady stream of income is a good sign for any car loan. 

Some other sources of income that lenders might consider include upcoming inheritance or pending sales of real estate or property. They may also consider an employment offer or contract that shows you’ll soon start a new role. This can demonstrate that you have upcoming financial resources that can go toward your payments.

Unfortunately, unemployment payments may not provide sufficient evidence to a lender that you will be able to successfully make the payments for the vehicle. Since these benefits are intended to be temporary, it may not show that you have a reliable and constant stream of income. However, combining unemployment payments with other forms of income or other methods in this article may make it easier to save up for payments as you work toward purchasing your vehicle.

Credit Score

The higher your credit score, the more likely you’ll be to receive a car loan. A higher score can also mean a lower interest rate. Generally, credit scores range from 300 to 850, with 300 to 579 considered very poor, 580 to 669 considered fair, 670 to 739 considered good, 740 to 799 considered very good, and 800-850 considered exceptional. While some companies may offer loans to those with low credit scores, the options may be limited and offer challenging terms and conditions.

You can easily check your credit score online at any time through free websites like Experian or Credit Karma. This can help you better understand where your score is currently and if there are any opportunities for improvement. As you learn more about your score, you may realize that you have opportunities to improve it before applying for a loan.

Paying off any debt is an effective way to increase your score. You can also pay your bills on time to boost your number. If you don’t have sufficient financial resources to do this, though, you might also be able to improve your score by examining your credit history and reporting any incorrect or incomplete information.

Closing down credit cards could drop your credit score because a longer credit history means a better score. So, if you’re planning on closing down a card, you may want to wait until after your loan has been approved. Credit inquiries, like the ones required for some loans and credit cards, might also temporarily decrease your score. If you’ve recently experienced one of these inquiries, you may want to wait until your score rebounds before applying for a loan.

Co-signer

If you have a trusted loved one with a steady source of income and good credit score who is willing to co-sign a loan with you, this can increase your chances of getting a loan. It can also provide you with a better interest rate. If you miss a payment on a co-signed loan, though, both your credit score and your co-signer’s could decrease. It can be important to guarantee that you have sufficient resources to make your payments to avoid any issues if a missed payment occurs. 

Down Payment

If you have some money available currently, you can put a down payment on your vehicle. This can help reduce the amount you would have to pay on the vehicle, thus reducing your loan. A smaller loan may be more likely to be approved, even if you’re unemployed. For example, if you have $3,000 available and would like to purchase a $15,000 car, you can put down a $3,000 payment, which would only leave $12,000 for the loan. 

While you may still need to use some of these steps for your smaller loan, it can be easier to find a good loan offer. A smaller loan can also limit the amount of interest you’d have to pay, saving money for payments and other necessities. Down payment may not always be the best decision, though. If you want to lease your vehicle, it’s better to keep your down payment smaller.

Should You Get a Car Loan While You’re Unemployed?

In some cases, applying for a car loan while you’re unemployed may result in less desirable terms and rates than if you had a steady job. However, following these steps can help you improve your loan opportunities dramatically. If you’re looking for an affordable, high-quality vehicle, check out the inventory of pre-owned vehicles at your North Coast Auto Mall, some of which are priced under $10,000. You can also contact our finance center with any questions you may have. We’ll help you explore your options to make a reasonable and informed financial decision.

At your North Coast Auto Mall, we know how challenging it can be to get a reasonable car loan without a job. Hopefully, these steps can help you find a suitable loan to help you get your ideal ride. If you have any questions about the loan or car buying process, you can always contact us today. We can’t wait to help you drive off in an affordable, high-quality vehicle. 

 

Posted in Car Financing