One of the most challenging issues people can face is buying a car with no proof of income, job or a non-traditional employment situation. While it is important that loans and credit are regulated to some extent, it can also leave those in dire need of a car out in the cold. Before you give up though, it’s helpful to know that getting a car without a job or regular income is possible—as long as you have some way to make payments and are ready to put in a little extra work and some finesse. Here are some things you can do to prove your car-buying worthiness.
Provide Proof of Ability to Pay
Many people have gone through a period they didn’t have a job. Sometimes it’s because of a layoff, or maybe you just finished school and are searching for employment, or perhaps you need to move on from a job that didn’t fit. The other issue people face is employment without a standard or regular paycheck, like self-employment or contracted work. However, the thing that is most important to many lenders is your ability to pay. Some things that can show you are financially solvent are:
- Tax returns
- Bank statements
- Reports of previous income
- If you’re self-employed, contracts and invoices that show you are making money
If you’re on unemployment, use that to establish that you have a source of money until you find the next job. It will also be important to show that you have a long-term living situation. It helps prove you do have stability in your life. Bring mortgage statements, copies of rent checks, a letter from a landlord or utility statements.
Make Sure Your Credit is Decent or Show that You’re Working to Improve It
In a situation where you don’t have a job or regular income, your credit is most likely going to be more important. If it’s less than good, you’ll want to at least have been taking steps to improve it. This means paying accounts on time, disputing any inaccurate information on your credit report and paying off debts and collections. If you’ve already started taking the steps to improve your financial picture, show that to the lender. One thing to note is that it is often better to clean house a little before approaching the lender. Improved credit better received than someone in the process of improving it.
Put Down a Good-Sized Down Payment
The size of your down payment may make a lender sit up and take notice. If you’re able to pay 30% or more, that could make all the difference in getting a loan to buy a car. If you have a trade-in, that can help with the down payment as well. The bottom line is to gather enough cash to really show that you’re invested in buying a car.
Find a Cosigner
Sometimes your friends and family can come to the rescue when you’re stuck and need a vehicle. A cosigner uses their good name and credit to vouch for you. The most crucial thing to understand is that how you treat that loan affects their credit as well as yours—so make sure you are serious about paying for your car or you can end up burning bridges. Do your research before you approach your potential cosigner. You’ll want to have a budget, a few cars in mind, your full financial picture and a plan for how you are going to pay the loan back. You need to give them all the information so they can make a decision based on the facts. If they decide to move forward, it’s your job to show them that they made a good choice helping you out.
Look at the Alternatives
Traditional lenders might take one look and say no to your situation. Make sure you’ve explored all the avenues before throwing in the towel. Sometimes in-house financing is a good solution for people with non-traditional histories or finances. Be prepared to keep at it until you find the right lender for buying a car.
It’s not easy to buy a car when you don’t have a regular source of income or a typical job. The key is persistence, utilizing alternative ideas and being prepared to answer all types of questions. Instead of giving up after a no or two, try seeing if there is something out there that will allow you to buy a car.
