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Qualifying for a car loan with a part-time job or multiple jobs

Bad credit car loans involve different requirements in order to qualify for one. If you only work part-time or have multiple part-time jobs, you should be aware that these factors can affect your chances of getting a loan.

Income requirements on subprime auto loans

When it comes to subprime auto loan income requirements, there are generally three different factors to consider:

  • Minimum income of $1,500 to $2,000 per month – Although there is no national standard, subprime lenders are generally looking for between $1,500 and $2,000 monthly salary before taxes are taken. This must be W-2 income from a single source, and you must be able to verify it with the appropriate documentation. Most lenders look for a recent computerized pay stub that lists year-to-date income as proof of income.
  • Maximum debt to income ratio of around 50% – Low credit lenders also look at your reported income against your monthly bills in what’s called a debt-to-income ratio (DTI). Divide your monthly bills by your monthly pre-tax income to find your DTI. For example, a person with $1,500 in expenses who earns $3,500 per month has a DTI ratio of 42.8%. Subprime lenders typically set the maximum allowable DTI ratio between 45 and 50 percent.
  • Maximum payout-to-revenue ratio of around 20% – The payment-to-income ratio (PTI) is another calculation that lenders use to set a maximum payment for the car. The PTI is obtained by estimating the payment for a car and insurance and dividing by the monthly income before taxes. The subprime norm for a maximum PTI ratio is usually between 15 and 20%.

These requirements sometimes make it difficult to qualify with a part-time job or multiple jobs.

Part-time employment income

You can get approved for a bad credit car loan even if you only have a part-time job, but only under the right circumstances. It starts with meeting the minimum income requirement with just one job. Lenders care about you earning enough income to qualify, not so much about the hours it takes to do so.

However, subprime lenders also consider job stability and time spent at work. It helps when you can show that your income is consistent and long term. This can cause problems for applicants with less than a year’s tenure or seasonal employment.

Additionally, applicants who earn tips may encounter problems. If employees who regularly earn tips don’t accurately report their earnings, it could upset their DTI ratio and lead to a denial.

Qualification with several part-time jobs

The tricky part of qualifying for a car loan with bad credit if you hold several jobs is that you must meet the minimum requirement with earnings from employment. Lenders will look to your main job – the one that pays you the most – for the monthly minimum of $1,500 to $2,000.

For example: Suppose car buyers Sam and Jon both have part-time jobs. Sam earns $1,700 per month in one job and $400 per month in the other, while Jon’s two jobs pay $1,200 and $1,000 per month respectively. Jon, although he earns $2,200 per month compared to Sam’s $2,100, will not be able to qualify because he does not earn enough to meet the minimum requirement with just one job.

However, your earnings from other jobs are not lost to these lenders. They will use it as part of your DTI and PTI calculations, which can improve your chances of qualifying, the conditions available to you, and your selection of vehicles.

The essential

If you work part-time or multiple jobs, make sure you know the income requirements of subprime lenders. Also, be prepared to provide proof of income from each of your jobs with the appropriate documents.

If you have credit problems and need a car loan, Auto Express Credit can help you connect to a local dealership. Our nationwide network of dealers specializes in helping people with less than perfect credit. Start the process by filling out our free and secure form car loan application form today.