Many people receive benefits for a variety of reasons. In these cases, the government can often step in to help you out and make sure your needs are met. In the UK, for example, Jobseeker’s Allowance (JSA) is for those who are unemployed by looking for a job. The allowance allows those individuals to keep money coming in each month. For the disabled, the government can offer anything from universal credit to an Employment and Support Allowance (ESA).
How can you secure a loan if you don’t have a steady income? Let’s look at some options.
Show a Proof of Residence and Other Bills - One of the best things you can do to secure a car loan is to show proof of income. But, if you don’t currently have a job or you’ve never had a job due to a disability, obviously that can’t happen. You’ll have to prove to a lender the other ways that you are financially responsible and able to make payments on a car loan.
This can be done by showing:
Other Sources of Income - You can use some benefits as sources of income to show a lender. JSA is a good example. It shows that while you’re not currently employed, you are receiving a steady amount of money each month, and actively looking for employment that would bring in income.
Other government benefit programs and different types of allowances can also be shown as proof of income if you’re unemployed. If a lender sees that you have the money to cover those monthly payments, they will be more likely to work with you when it comes to car finance.
Check Your Credit Score - The great thing about credit scores is that they take more than just your income into account! So, if you don’t have a lot of money coming in each month, you can still have a great credit score, and many lenders put a lot of leverage into that score to determine whether you’ll qualify for a loan.
If your credit score is low and you want to give it a boost before going to meet with a lender, try to get rid of any outstanding debts you have, or work to lower them significantly. You’ll also improve your credit score over time by paying all of your monthly bills on time.
Use a Co-Signer - You may be able to use a co-signer if the income you’re bringing in each month isn’t satisfactory to a lender. Getting a car loan on benefits can be easier if you have someone to help you out. A co-signer is someone with a steady income that can vouch for you to a lender. Not only can they help to ensure the lender that you’ll make your monthly payments, but they will be your “backup” if for some reason you cannot.
Use Assistance Programs - Depending on your benefits, you may qualify for certain assistance programs that will help you to get a vehicle. Car finance on benefits can be different than traditional routes but it’s not impossible. Check out which assistance programs might work for you, or how you can utilize your benefits to obtain financing for a car. There are even certain programs out there that help disabled individuals or those who aren’t able to work by donating vehicles or offering funds for a car.