Can a Person on Social Security Disability Get Financing for an Automobile?

by Cynthia Myers

    Social Security Disability Income provides a monthly check for workers who have become disabled and are no longer able to work. The amount you’ll receive depends on your average lifetime earnings. If you worked in a high-paying field, you’ll get a bigger check than someone who earned minimum wage. According to Disability Secrets.com, the average monthly SSDI check in 2011 was $1,111. This small of an income can make it difficult to qualify for auto financing, but it’s not the only thing finance companies will consider when they look at your loan application.

    Debt Ratio

    Banks and finance companies want to be assured that you can pay off the loan they’re making so they look closely at your debt ratio: the amount of debt you have to pay each month compared to your monthly income. Bankrate.com reports that lenders don’t like to lend to people whose debt ratio is more than 36 percent. If your monthly mortgage or rent payment and credit card bills consume more than 36 percent of your monthly income, you’ll have a tougher time getting a loan. Paying off credit cards and getting rid of any other outstanding debt before you apply for a car loan will help you look better in the eyes of lenders.

    Credit Score

    A bad credit rating makes it tough to get a loan, especially in tough times. You’re entitled to a free copy of your credit report once a year. Write the credit reporting agencies to correct any errors on your report and work on raising your credit score by paying off debt if you want to impress a lender.

    Size of Loan

    Making a larger down payment to reduce the size of your loan or buying a less expensive vehicle are other ways to improve your chances of getting a loan when you’re relying on Social Security Disability for your income. A smaller loan means less risk for the lender and smaller payments for you. Smaller payments make your debt ratio look better. A bigger down payment also increases your equity in the car and makes it less likely you’ll be upside down on the loan.

    Co-Signer

    Lenders often object to giving loans to people on Social Security Disability because they can’t garnish these funds the way they can the wages of people whose income comes from a job. Lenders don’t like not having that guarantee. You need to find a lender who will overlook this, so approach more than one bank, credit union and finance company. In addition to having a good credit rating and low debt ratio, adding a co-signer who is employed could help you secure a car loan. The lender will like the reassurance that he can garnish your co-signer’s wages.

    Access Loans

    If your disability makes it necessary for you to buy a car outfitted with special equipment such as hand controls, you can apply for an Access Loan through a local bank or credit union. Access Loans provide low interest rates and favorable loan terms to disabled people to help make homes and vehicles more accessible to them. You’ll need a 10 percent down payment and can borrow the money for as long as six years. You can use the money to purchase a new or used vehicle.

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