Ever wonder how to buy a car on disability? Well, we break this down for you below. With the Social Security Disability benefits as your primary source of income, there is a long list of perks that come along. Paying up living expenses and covering daily essentials doesn’t require many struggles. But there are many limitations to the budget when disability income is your only source. You often stop when you think of doing something beyond the essentials since the budget is not enough.
Therefore, with a tight budget, getting your own car can be quite a challenge. Getting a loan to buy a car might prove to be more difficult for you than it generally is for people with ordinary income. The majority of the lenders are quite reluctant when it comes to giving a loan to buy a car for the people who are solely reliant on Social Security Disability benefits. Couple that with a bad credit score and the chances to get a car loan start to diminish.
But, this doesn’t mean that you are limited to resources. With proper strategies, you can get a loan that should be able to get you the car you need.
Things to help you buy a car on disability
Listed below are a few simple steps that will help you get a loan for a car when you are living on a fixed income:
Keep A Regular Check Of Your Credit Score
Keeping track of your payments is always a good idea. It eliminates the components of surprise. Keeping the cleanest credit history possible is very vital when you apply for any loan. It helps remove roadblocks that loaners would have with you being on only disability income. The smartest idea is to give yourself a period of at least 3 to 6 months lead time to combat any credit discrepancies.
You can utilize this time to get rid of any errors that might be marring your credits long before you apply. Remember that the credit bureaus have 30 days for the investigation of every credit dispute that they find. So, it is important to take on these issues beforehand.
Demonstrate An Income Other Than SSDI
On average, the financial lenders and auto creditors require $1,500 to $1,800 on a minimum per month. Per week, it usually takes $375 to get approval for a car a loan to buy a car (this can vary and be different at 500 Below Cars). This is because lenders are not able to garnish the wages from SSDI. This is why if you get a second source of income, it can give the lenders enough reassurance to sign off a loan on your application. Therefore, it is beneficial to look into getting a part-time job. This income can be combined with your disability benefits for reaching the required amount needed to obtain a car loan.
Don’t forget that for counting the SSDI, there are some steps taken as well. You must be able to prove that you have been on disability for at least a period of six months. The lenders will also need you to confirm that you will continue receiving the payments until the entirety of the loan term. The wages that you earn through your second income need to be verified with your most recent check stubs. You may also need to show tax records from at least the past twelve months to indicate how much money you have reported.
When you provide the lenders sufficient proof of income, you dramatically increase your chances of approval. The greater your income is, and the longer your history of working is, the better your chances of approval will be. Remember every lender is assessing their risk of the possibility the consumer can pay back the loan. So adding a steady income and reducing expenses increases the probability of a car dealership or loan officer is willing to take the risk.
Convey The Lender About “Situational” Bad Credit
Loan officers and in-house financing car dealerships take notice of previous unpaid loans or bad credit history. Typically, when you fail to pay back a loan it will appear in your credit history hurting your credit reputation.
If your credit history shows problems such as late payments or even missed payments, sharing it with the lender is necessary. Whether you couldn’t pay because of additional medical bills or any other reason, disclosing it to your lender is always essential. Your willing disclosure of your credit history can demonstrate honesty and that you are not negligent. Coveying this to your lender will show that your problems are acute and not chronic. Honest and open communication to your lender will help you get more chances of approval for the car loan.
This is were 500 Below Cars differs from typical in-house financing dealerships, banks or other loan officers. We understand that stuff happens and that your credit can be misunderstood and hurt from unforeseen situational circumstances. We go more off your stability of steady income and help break down your current situation and possible future situations.
Get A Co-Signer For The Loan
Getting a car loan for a loan with a disability is simpler if you have a co-signer. This is especially useful if you do not have a garnishable source of income. Getting one of your close friends or a family member with a qualifying income to co-sign increases your chances of getting the loan approved. This also precludes the disability income problem. If their income is sufficient enough, then the lender will go ahead and sign your application.
The responsibility is huge and cannot be taken lightly. The individual has agreed to share responsibility with you. If you default for any reason, they will be held accountable for making payments. Also remember, the loan will not only appear on yours but also your co-signers credit report. It should also be understood that any mismanagement of the loan will impact both of your credit scores.
Choose A Vehicle Where The Monthly Payment Is Affordable
If you take a look at the auto market, the monthly price of cars is extremely high. So when you plan on applying for an auto loan, make sure that you choose a vehicle that has a standard monthly price you can afford on your fixed income. Choosing a vehicle where the monthly price is predictable will lower inherent risks to your loans and increases your chances of approval. 500 Below Cars is a perfect example of offering transparent affordable monthly pricing that is predictable. You can pick a vehicle off the monthly payment from $300 a month cars, $400 a month cars & $500 a month cars to fit your needs.