It’s not uncommon for Los Angeles residents to work two jobs, but it can play a role in whether or not they get a car loan. If you need a car loan and have bad credit, you must meet the lender’s minimum income requirement. In addition, this amount must generally come from a single job. If you don’t earn enough to meet the minimum income requirement from one source, you may not be able to qualify for a bad credit auto loan without additional help.
Los Angeles Bad Credit Car Loan Income Requirements
When you have bad credit and live in Los AngelesYou are going to want to work with a subprime lender. These lenders offer loans through dealers who specialize in financing and know how to handle various bad credit situations.
These lenders have a range of requirements that you must meet, and one of them includes a minimum income level. Subprime lenders generally require a minimum income of around $1,500 to $2,000 per month before taxes from a job.
You must also bring proof of income with a recent computer-generated pay stub showing year-to-date income if you are a regular W-2 employee, or recent tax returns if you are an independent contractor or worker independent. .
What if you have a second job? As mentioned, you must meet the minimum income requirement with earnings from employment. However, it’s more than likely that a lender will consider all of your sources of income when putting you in debt.
When a lender does this, it means they are calculating your debt to income (DTI) and payment to income (PTI) ratios. These look at how a car loan fits into your budget given your monthly income. You can calculate your DTI and PTI ratios yourself in advance to see where you stand.
For your DTI ratio, add up all your monthly bills — plus an estimate for vehicle and insurance payment — and divide the sum by your monthly pre-tax income. As long as your DTI ratio does not exceed 45% to 50%, you are in good shape.
For your PTI ratio, add your estimated car payment and your insurance payment and divide the total by your pre-tax monthly income. This ratio should not exceed 15% to 20% if you want to be approved by a subprime lender.
How to get a car loan on a low income
If you find that you do not meet the minimum income requirement for a job, your next option to get approved is to add a co-borrower to the car loan. Not to be confused with a co-signer, co-borrowers are usually a spouse and share ownership of the vehicle.
The advantage is that you can combine income with a co-borrower who is your spouse. This means you can meet the minimum income requirement together, which could help you qualify for the car loan.
Plus, if your co-borrower has great credit, you might even qualify for a better interest rate, which means you can save even more money on the overall cost of the loan.
Be aware, however, that the only way to remove a co-borrower is to refinance and qualify for the auto loan on your own. You can learn more about refinancing and removing or adding co-borrowers here.
Find a dealership in Los Angeles
Meeting the minimum income requirement is just one of many things you must do to qualify for a bad credit car loan in Los Angeles. However, it is also one of the most important requirements and a decisive factor for an approval.
When you are ready to start the car financing process in the City of Angels, Auto Express Credit is here to help. For over 20 years, we’ve helped struggling consumers find auto loans by connecting them with local dealerships in Los Angeles and throughout California. We want to help you too – fill out our quick and free form car loan application form to start today.