Most people battling disabilities get Social Security Disability benefits as a primary source of income. For these people, getting approved for an auto loan is challenging. However, all is not lost. There are ways of obtaining a car loan.
The reason that getting car loans are tough for the disabled is that Social Security Disability is a type of income that cannot be garnished. Lenders need applicants to give them proof of garnishable income. They need this so that they have a sort of guarantee that they can get their money back if the borrower defaults on payments. Lenders aren’t able to go after social security income to pay off a default on an auto loan.
People with part-time jobs that pay them even a tiny amount of garnishable income have a better chance of getting approval for an auto loan. Another way of qualifying for a loan is to get a co-worker with a qualifying income to share the loan. This will put you in the best possible situation for the lender to sign yes on your application.
Another option open to the disabled is a no credit check car loan. Dealers who offer buy-here-pay-here (BHPH) offer financing to disabled people with bad credit. Credit checks usually aren’t run because financing is handled in-house rather than with a third-party lender. One of the downsides to buying a vehicle through a BHPH dealer is that the vehicle will probably be a little older and used with slightly higher mileage.
If you’re a long-term resident and have situational bad credit instead of habitual bad credit, you stand a much better chance of getting approval for an auto loan. Situational bad credit refers to building bad credit in situations such as a medical issue.
If you have bad credit, you stand an even worse chance of getting approval for an auto loan because as already stated, your Social Security Disability benefits cannot be used if you default on payments. Bad credit also tells lenders that you make irresponsible financial decisions and are very likely to default on payments.
Whatever people tell you, there are options for a car loan for the disabled. The best course of action would be for you to drop into a dealer and discuss your options.