Can You Finance a Used Car with No Job?

Can You Finance a Used Car with No Job?

May 15, 2019    Bad Credit Loans

When financing a used car purchase, one thing lenders consider is your employment history. Getting approved for a used car when without a job isn’t impossible, but there are certain things you’ll need to know to qualify for a loan. We break down why having a job matters for car loan approval and how to navigate the financing process if you’re not currently working.


Why do lenders require you to have a job when financing a used car?

It’s simple. Lenders want to know that when they offer you a car loan, you’ll be able to pay it back. They use your employment history to confirm that you’re working and drawing a steady paycheck, which would allow you to keep up with your monthly loan payments. .

A reliable job and income can also work in your favour if you have a less than perfect credit score. Having a stable employment history could help offset past credit score damage.

What type of job history and income is needed for a car loan?

Each lender sets the bar differently for the minimum employment history required to qualify for used car financing. Generally, lenders look for borrowers that have at least six months’ at their current job and one to three years of employment history overall.

The minimum income needed to qualify for a car loan also varies. Typically, however, lenders prefer to see at least $1,500 to $2,000 in monthly income.

What are the options for financing a used car with no job?

If you’re attempting to get a car loan and you’re not working, there are some things you can do to raise your approval odds.

1. Get a cosigner

A cosigner applies for a car loan with you; their credit score, income and work history are used for loan approvals, just as yours are. Having a cosigner with a strong credit rating, stable job and steady income could make it easier for you to qualify for a loan.

Your cosigner could be a parent, spouse, friend or anyone else you know that has good credit and is financially healthy.

2. Show proof of other sources of income

You may not be drawing a paycheck but there might be other sources of income you could use to support a car payment.

For instance, you might have:

  • Interest income from investments
  • Money you receive as part of a structured settlement from a lawsuit
  • Amounts paid out from a trust fund
  • Disability payments
  • Spousal support or child support.

All of these can be used as proof of income to qualify for used car financing when you don’t have a job.

Make sure that if you’re offering alternatives to paystubs, your income is documented properly. Be prepared to offer investment statements, tax returns or other documentation to show how much money you have coming in each month.

3. Offer a larger down payment

A third option you might consider is increasing the amount you put down on a used car.

A larger down payment means less the lender has to finance. By opting for a larger down payment (and thus, a smaller loan), the lender may be more confident about your ability to repay what you’ve borrowed.

The same is true if you’re applying for financing with poor or bad credit. Offering more money down could show the lender that you’re serious about managing your loan responsibly, despite any negative marks on your credit.

Choose a lender that understands your situation

Not having a job doesn’t have to prevent you from financing your next used car. You may be taking time off from work for family reasons or to attend school. Or an unexpected layoff might have you planning your next step in your career journey. Fortunately, there are lenders that offer financing to qualified borrowers in these types of scenarios.

To qualify for a car loan with Birchwood Credit Solutions, you need a minimum monthly income of $1,500. Canadian residency and a valid driver’s license are also required for financing. If you meet those criteria, reach out to discuss your loan options.

We’re going to break down Manitoba tax brackets based on yearly earnings so you’ll be more prepared and informed by the time you file your tax return this year.

Get one step closer to a new vehicle today. Complete an online application today or give us a call. Our Finance Managers are ready and waiting to help.

Rebecca Lake
Written by

Free Buyers' Guide

Download our New to Canada Guide

Download Now
Free Buyers' Guide