Child support payments have an impact on your reported income and how car loan companies calculate your financing offers. Before you start applying for car loans, you should understand how the child support you receive can affect the financing process and what you can do to avoid any unnecessary complications. 
Wage Garnishing
The primary reason child support payment income can complicate the loan approval process is that child support income cannot be garnished by your lenders in the event of default. Lenders like to know that they have all collection avenues available to them, including vehicle repossession and wage garnishment, should the need arise. After a car is repossessed and sold, wage garnishment is used to collect any amount of the loan left outstanding. Lenders that provide subprime auto loans to those with bad or limited credit will be additionally cautious while calculating the loan terms for you based on child support income, due to the percentage of subprime loans that end in default.
Work on Your Credit
An excellent credit rating goes a long way toward neutralizing any negative impact child support income may have on your car loan applicant status. A well-maintained credit report becomes even more important than the average loan applicant’s once child support income is a factor. Good to excellent credit tells lenders you pay your bills, know how to keep up with your credit usage, and approach your finances with a generally responsible perspective. This means wage garnishment is less of a concern, since you have a clear history of paying back your debts.
Highlight Other Income
Do not let child support income distract potential lenders from any other income you earn. Unlike the routine child support payments you receive, paychecks and annuity payments can be garnished. While you are working with car loan companies, be sure to highlight the percentage of your income that comes from sources capable of being garnished. The lender will decide if your non-support based earnings make you a more attractive financing candidate.
Reliability and Responsibility
Someone who collects child support and also has a history of short term residency and habitual bad credit will have a harder time finding car loan approval compared to a child support recipient that can prove a stable residence and an overall steady credit history. A one-time financial misstep that hurts your credit is often less of a roadblock than an ongoing problem maintaining satisfactory credit. Provide potential lenders with proof of your reliability and responsibility while negotiating around your child support income.
Child support income can change the way lenders interpret your car loan application. Since child support payments cannot be garnished by creditors, other borrower worthiness factors are looked at more closely. Work on improving your credit and compiling proof of your financial reliability before applying for a car loan while collecting child support.
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