When we think of auto financing, we often assume that you need to have the steady paycheck of a full-time job to get approved. Luckily, this isn’t always the case! In fact, you can finance a car even if you’re unemployed and don’t have a steady income. However, that doesn’t mean that every car loan lender will approve you—you still need to be cautious when choosing an auto financing company!
Why Should I Buy A Car If I Don’t Have A Job?
Some of the biggest deterrents to car ownership, or making car payments when you don’t have a job are access to income and car insurance. But there are some other considerations that may help make the decision for you—ones that will be on your mind even when you do find work. And before we get into it, let’s go over how credit works.
For those who are not familiar with your credit report, it is a document from one of the three major reporting agencies (Equifax, Experian, TransUnion) which tracks your financial history and presents it as one three-digit number called your credit score. Credit scores range from 300-850, where higher numbers indicate better credit risk. When you apply for a loan like a mortgage or auto loan, banks take into account your credit score because they want to know if they can trust you enough to give you money. If your score is too low, then chances are high that the bank won’t approve you for their services.
The first type of car financing is credit-based. It’s your credit score or lack thereof, that determines whether you can get approved for financing at all. If you have no credit, have gotten into trouble with your credit score in the past, or have a score that falls below a bank’s required minimum—typically 640—then your only choice for vehicle financing is to pay cash upfront or get what’s called no-credit car loans. Credit-based loans are easy to qualify for if you already have good credit and want to take advantage of 0% interest promotions on new cars.
How To Get A Car Loan Without A Job
The bad news is that many banks will not give you a car loan without having a full-time job. They want to know that you have a stable income in the form of wages or commissions so they can be sure they will get their money back. Banks also look at your credit score and repayment history before approving your loan application, which means you need to make sure those are good before approaching them for financing. The good news is there are other options. Some companies offer loans for those with little or no credit history, for example. And even if banks refuse to lend you money, there are still plenty of avenues through which you can get financing.
Banks don’t just look at your job status, though. It’s also important to make sure you have a decent credit score and haven’t made too many late payments on loans in recent years. If you want to qualify for financing but you have no stable income stream or good credit history, then it can be helpful to ask friends and family members if they would agree to co-sign your loan application. Some banks will allow co-signers so they can feel confident that they will get their money back if you are unable to do so. However, with some banks, it is not possible to add a co-signer unless you already have a strong credit history and steady income as an individual.
Tips to get approved for your first loan
- Have at least 20% down: To get approved for your first loan, you need to put at least 20% down on the car (or 25% for certain brands). If you can’t afford this much cash upfront, then it’s best to just save up and buy a cheaper car or borrow from family or friends.
- Have good credit:
If you have good credit with no recent delinquencies, then lenders will see that as a sign of stability and give you better interest rates than if your credit is bad or nonexistent.
- Shop around for financing options before buying the car:
Once you know what kind of monthly payment you can afford, it’s time to shop around for loans so that we can find one with competitive rates and low monthly payments. It’s also important to compare different kinds of loans because they all come with different terms that could be more or less appealing depending on your situation.
- Have all of your paperwork ready to submit when you apply for a loan.
Things you should know about Auto Financing.
Auto financing is not as simple as it may seem. Between figuring out your budget, how much car you can afford, making trade-offs for fuel efficiency, choosing whether to lease or buy, and then finding the best auto loan rate and terms for you–a lot has to go right. To make this process easier, here are six things that you should know about financing a car:
1) Financing a new or used car involves rates that go up and down with changing interest rates.
2) Check at least two lending sources and choose the one that gives you the best deal.
3) When you finance a car, you don’t have to worry about the upfront payment because that’s usually included in your monthly payments.
4) Keep in mind that when you finance a car, it will cost more than if you pay cash due to interest charges and other factors.
5) Don’t forget about insurance costs which will be lower if the vehicle is financed through an auto loan than if bought outright because part of the monthly payment goes towards insurance coverage.
6) Don’t put yourself in danger by buying too big of a vehicle that’s beyond what your budget allows or neglecting other important financial responsibilities like saving for retirement while paying off debt.
If you are going to finance an auto loan, keep these things in mind so that you can make sure that it’s right for your needs. The right financing plan will help you get behind the wheel of your dream car, even if you’re dealing with credit issues. It’s best to know what kind of financial decisions you need to make before going shopping for a new or used car. Researching financing options will help put money in your pocket and give you peace of mind as well! After all, there is no shortage of advice online and from friends about how to save money when buying a new or used car. This can be confusing for someone who’s never bought one before and may not understand how deals work between dealerships and lenders.