How Child Support Income is Viewed by Lenders
Income such as Child Support, Retirement Benefits, Disability Benefits, Self Employment, and Alimony can help you qualify for your next auto loan.
When it comes to buying a car, one of the most important considerations is the cost of financing the loan.
If you are a single parent you know how important it is to watch your spending and get the best possible car loan rates right from the beginning.
You do not need any unexpected surprises with used car dealers and auto loan lenders.
Do you know how Child Support Income effects your car loan qualifications?
What's On This Page:
- How Child Support Income is Viewed by Lenders
To achieve this, lenders set some guidelines that applicants need to follow.
In the past, folks who have tried to show child support as income have gotten disappointing responses from the lenders they apply with.
Car Loans With Child Support Income
Sometimes getting the car loan approved with child support income causes more stress than how much you should pay for financing a new car.
Moreover, many people concentrate on trying to qualify for the best interest rate and paying the least amount out-of-pocket.
But those with poor credit only focus on being eligible for funding.
If they are either making or receiving child support payments, the qualifying process can be significantly different.
We can assist young parents with:
- Building credit and qualifying for a new car loan at the same time.
- Qualifying for auto financing with Child Support Income and other types of income.
- Budgeting your money so that the money is available for each bill at the proper time.
- Educating young car buyers about sales tricks that car dealers use every day.
Before beginning the loan pre-approval process, it is important to understand how lenders see income.
It is also important to know how low of a credit score is acceptable for a car loan. When a car buyer decides to borrow from a moneylender, the provider will look at many things such as;
- If a borrower has a credit history or not.
- The amount of money they earn.
- How long they have been with their current employer.
- The amount of existing debt they have.
- Other supplemental income and other assets.
How You Stand With The Lender
Parents with a strong history of repaying their debts on time have a small number of existing debts.
Adequate income, to pay for their monthly obligations represents a lower risk. They usually wind up getting the best interest rates and are required to pay less down.
Those who have had a few late payments or charge-offs or who have recently changed jobs may not get a high credit score as they deserve.
Poor credit lenders take these problems into consideration but will qualify you based on your available income and your ability to pay down the loan.
You May Qualify For A Subprime Loan With Child Support
Subprime lenders, on the other hand, specialize in providing high risk loans to borrowers who have a higher risk profile or have experienced bankruptcy.
Those who have had a few issues with repaying debts in the past can qualify for a subprime loan and loans tailored to fit your need for low-income car loans.
It is important that the borrower show more than enough money coming in to meet their monthly obligations.
This helps prove that they can make their monthly loan payments on time.
Bad credit auto lenders look closely at all your forms of income combined and not just your credit score.
It is important for them to have an accurate evaluation of your income including child support and alimony vs your outstanding debt.
Refinancing For Cash Out, Consolidate debt and Lower Your Payments
When applying for auto refinancing through Valley Auto Loans, make sure that you include your child support income as well as other forms of monthly income.
This gives the lender a better idea of your income to debt ratio.
Subprime refinancing a car loan allows you to use the equity for cash.
This is a good way to consolidate debt. Refinancing your vehicle can give you a lower APR then no collateral, personal loans (which we always suggest avoiding personal, short-term loans, if at all possible).
Child Support As Income
Many lenders look at child support payments differently than a regular income.
These lenders can choose to garnish this money if the borrower defaults on the loan.
What this means is that if a borrower defaults on their loan and can no longer make the regularly scheduled payments, the lender can still repossess the car.
However, they cannot obtain a judgment to garnish those funds.
They will not be able to use them to satisfy the difference between the loan and what the lender sells the car for, leaving them with a loss.
Does that mean that people with bad credit who receive child support payments are out of luck when it comes to getting a car loan?
There are a few things you can do to improve Your chances of being approved for a loan.
- Having a stable job is important. The longer a Parent has been on the job along with receiving child support, the more steadfast he or she appears to the lender.
- Borrowers who have recently changed jobs stand a better chance of being approved if they wait for at least six months before applying for a car loan.
Additionally, taking on a second job to show more income from a source that could be used directly toward a purchase will also help.
- Long-term stability also counts when it comes to a borrower's residence. The longer someone has lived in the same apartment or house, the better he or she seems to a lender.
- Because it shows that they can make necessary payments like a mortgage or rent payment on time.
- Credit issues that revolve around a particular situation that have a clear explanation look better to potential lenders.
- These could include items such as a separation or divorce, medical illness or other emergencies rather than a pattern of bad behavior.
- Being able to provide a lender with an explanation for a cluster of missed or late payments will go a long way to landing an approval.
Proving Child Support Income
Parents who use child support payments to bolster their income will have to be prepared to show both the amount of the payments as well as the frequency.
This means that to claim the payments as income, the borrower will need to provide a copy of the order. T
hat will outline the amount and frequency of the payments but the duration of time they will be receiving them.
If You Pay Out Child Support Payments
If the borrower is ordered to make scheduled child support payments and is behind, getting approved for a car loan is almost impossible.
The leading concern for this is that borrowers of this type tend to job shift to avoid court garnishments.
This lack of stability does not sit well with most lenders and most will red flag the application immediately.
Of course, job hopping is not the only reason banks do not want to take a chance on lending money to someone behind in their child support payments.
The other reason is that when the courts catch up to the borrower (and they always will eventually) and begin garnishing wages to recover the delinquent support, it leaves the borrower with less available funds with which to pay their car payments.
Usually, this results in a defaulted loan and repossession.
The good news is that while it might be more difficult, borrowers in this situation even have a few options to improve their chances of success with lenders.
Making arrangements with child services to catch up the delinquent payments and providing proof of these systems will cause some banks to take a second look.
Gaining Money for Your Divorce and Child Custody Case
Valley Auto Loans is ready to assist parents in qualifying for car financing to provide their families with safe transportation at affordable prices.
You need someone who does not overlook important facts like your child support income.
I am convinced that Parents with poor credit will have to overcome several hurdles to secure financing to purchase a new car if they don't get special financing from Valley Auto Loans.
Parents using child support as supplementary income for car loans should be prepared to supply any applicable court documentation that the lender will require.
This is your proof of your ability to count on that income to help pay any debts you acquire.
Valley Auto Loans is standing by to assist you.
Our application process is fast and easy with no cost or obligation to you to accept any loan offers you receive.