1) Income.
The first bad credit car loan requirement has to do with income. For most auto loans with bad credit, the lender will require a minimum monthly W-2 (regular employee) income of at least $1,500 to $1,600 per month if your credit score is below 640. And $2,000 is better. The reason for this requirement is that it addresses your gross income… meaning that the amount you are paid before withholding, Medicare, and social security taxes are taken out. Lenders generally require this standard minimum income so that they can be sure you can afford a car payment and full coverage car insurance in addition to your other bills.
For the most part, the bad credit car loan income requirements are for W-2 employees. This means that your employer supplies you with a W-2 income statement at the end of each year that reflects the wages you were paid. If you receive a 1099 form, meaning that you are an independent contractor or self-employed, the situation becomes much more complicated. Unfortunately, due to current economic conditions, most bad credit lenders will not accept anything other than W-2 employees for bad credit car loans. Lenders that may consider self-employment income will generally only do so with three previous years of income tax statements that have been prepared in a professional fashion. In fact, you may even be required to supply the lender with bank statements in order to support your stated income.
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