A household income derived entirely from disability benefits can make buying a car difficult, even more so if you also struggle with bad credit. If you're dependent on disability income and are in need of a car, there are ways you can get the loan financing required.
Why It’s Difficult
People who receive social security or disability income often have trouble getting approved for high-risk or bad credit/no credit car loans. In most cases, if payments aren't made toward the loan the lender can choose to garnish the wages of the borrower. This course of action isn't possible if you receive disability or other social security income, as these wages cannot be legally garnished. If someone on disability can't make their car loan payment, the lender can only repossess the car and send the rest of the outstanding debt to collections.
Proof of Income
The first obstacle you need to overcome when trying to buy a car while receiving disability income is providing sufficient proof of that income. This is where good recordkeeping habits come in handy. The best way to officially prove social security or disability income is with the original award letter that details the amount of income being given and the length of time it is valid.
Some lenders may also accept financial records such as check deposit images and bank statements that show steady disability income in your name. Make sure to bring sufficient proof of all income sources, including disability and other wages. Even a one-time job that brought in a seemingly inconsequential amount of money could bump your overall income to the required level.
Having a Spouse or Cosigner
Another named applicant, such as a spouse or other loan cosigner, with a wage that is able to be garnished can be of substantial help to someone on disability who is trying to finance the purchase of a car. The lender will take both the disability income and the income of the other applicant into consideration while determining whether or not to approve the loan. A cosigner with a credit rating better than yours is also a good idea if your credit rating is lacking. Even though having a cosigner can complicate your financial life, it is sometimes the only way a high-risk auto loan provider will approve your loan application.
Disability income combined with bad credit can make it difficult to purchase a car. With valid proof of income or a qualified cosigner, the process can be made much easier.
