How to Get a Car Loan While on Disability Income

A lot of things change when you go on disability income. While those benefits allow you to pay living expenses as you cope with your disability, the income doesn’t cover much beyond the bare essentials. Just because you’re on a budget, however, doesn’t mean you must be without your own transportation. Although it may prove more difficult for disabled individuals to get a loan to buy a car, it is not impossible with proper planning.

Image: Credit Karma

Step 1: Assess your creditworthiness objectively. There are several websites, including Credit Karma, where you can get a free copy of your credit report once annually.

Before applying for any type of loan, it is wise to know just what lenders (banks or other institutions that finance loans) will see about your ability to repay a car loan. That way, you can review the information for accuracy.

If there is information you think should not be included, you can file a dispute with each of the three major credit ranking agencies – Experian, TransUnion, and Equifax – that will be investigated and possibly removed. You should be informed of the results of any investigations within 30 days of filing a dispute.

Step 2: Add up any income outside of your disability. Those receiving disability benefits are permitted to work limited amounts without losing their Social Security Disability Income (SSDI).

It is possible to work up to 80 hours with less than $810 a month in outside earnings. Any outside income not only makes living on limited funds more palatable but also increases your chances of being approved for financing on an automobile.

Step 3: Determine how large of a loan you need. Whether you have income outside of your SSDI or not, it is highly unlikely you will be approved for a loan large enough to buy the latest sports car model that tickles your fancy or other vehicle with a high price tag.

As a general rule, lenders will only approve an automobile loan with a total amount less than or equal to about 35% of your annual income. So, add together your annual SSDI and outside sources of income and multiply that by .35 to arrive at the highest amount you can reasonably apply for in a loan.

Step 4: Consider a co-signer. If your credit report and total income paint a bleak picture for financing approval, there is still hope for buying a car.

Look for a co-signer on your desired loan; family members and close friends are your best people to approach.

Just bear in mind that, if you fail to make your payments, your co-signer is responsible for taking up your slack. This could potentially destroy a valued personal relationship, so don’t ask a person to take a risk on you if you are unsure of your ability to pay off the loan on time.

Step 5: Submit your applications to lenders. Once you have your income added, an amount in mind for the loan, and possibly a co-signer, approach lenders about financing.

Your bank is likely to extend you the best interest rate, while car dealerships with in-house financing are the most likely to approve financing with a higher interest rate. It doesn’t hurt to check with multiple sources, however; this increases your chances of finding an approval, and you may even be afforded the chance to choose the best deal on a loan for you.

Although being disabled and living on disability benefits limits a lot of options available to you, it doesn’t mean you have to be a total pauper. Having your own transportation goes far in making day-to-day errands manageable and provides a sense of freedom and pride. Go step by step through this process of getting an automobile loan, and you will be far closer to owning your own car. Be sure to have one of YourMechanic’s professionals perform a pre-purchase inspection before you buy the car so you can know it is in top shape.


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Chris

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Chris
21 years of experience
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Chris was great. He was early to the appointment, very communicative (responsive almost immediately for text and calls). He did a pre-purchase inspection for me on a car, and I was not able to attend the inspection. He was extremely honest with his feedback regarding both the car and the quality of the sale in general. I'm not a "car-person" and I felt like I could ask him anything and everything and not worry about coming across as stupid. I felt much better about my purchase after he was able to look at the car and give me his report.
Chevrolet G20 - Pre-purchase Car Inspection - Laguna Niguel, California
We did a pre-purchase inspection and Chris was incredible. He was very thorough, was clear and vocal about all of the potential issues we'd face in buying the camper. He gave rough estimates for fixing everything and an overall recommendation for what he thought the vehicle was worth. Priceless advice for a very affordable fee.

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22 years of experience
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22 years of experience
BMW X5 - Pre-purchase Car Inspection - Loganville, Georgia
My mechanic was very knowledgeable and took the time to answer all my questions. I will definitely use again.
BMW 535d xDrive - Pre-purchase Car Inspection - Loganville, Georgia
GReat service and even arrived earlier than our appointment which worked great for me. Was willing to answer all of my questions

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Jason
14 years of experience
Dodge Charger - Pre-purchase Car Inspection - Carteret, New Jersey
Jason came on time, explained the procedure and immediately started the pre-purchase inspection on my 2012 Dodge Charger. Very thorough, very knowledgeable! I’ll be using YourMechanic for the suggested maintenance and repairs.
Nissan Rogue - Pre-purchase Car Inspection - Linden, New Jersey
I truly appreciate Jason’s professionalism and the fact that he was quite detailed in his inspection of my vehicle. As a result, I now feel much more confident in my purchase and will utilize Jason’s services in the future.

Pierre

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Subaru Impreza - Pre-purchase Car Inspection - Revere, Massachusetts
My husband and I had Pierre take a look at a car for us before we bought it. He was super communicative with us, letting us know that he was running behind and would be a little late. When he did the inspection the guys at dealership were very impressed by Pierre and his thoroughness. After his inspection he gave us a full list of what he found and his professional opinion on the vehicle. Pierre's assessment gave us the confidence to purchase the car.
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