A woman wants to purchase a car on social security in a blue top

How to Buy a Car on Social Security or Disability

Milad Hassibi October 8, 2018

The National Bureau of Economic Research found that almost 4% of the American population is currently receiving Social Security Disability Insurance (SSDI) benefits.

If you are looking to buy a new car and are on Social Security, there are some ways you can obtain financing

Buying a Car on Social Security

Getting an auto loan or finding financing for a car while on Social Security can be hard for many A man stands in front of car keys while on social securityconsumers, especially with bad credit.

Auto lenders and dealerships typically do not provide auto loans to people only on Social Security income because Social Security income is non-garnishable.

This means that if you default on your auto loan, the lender cannot take wages from your Social Security income.

Most auto lenders like to see borrowers with a pre-tax income of $1,500-$2,000 per month.

If you earn at least this amount on a monthly basis, you should have no problem finding an auto loan, even with bad credit.

Social Security Disability Insurance Income for an Auto Loan

If you do not earn $1,500 per month and are on Social Security, you will most likely need to find other sources of income to show your lender.

This can include any W-2’s, 1099 forms, etc.. The greater the income you have, the higher your odds of getting approved for an auto loan.

In order to claim Social Security as your main form of income with an auto lender, you may be required to prove that you have been receiving Social Security benefits for at least 6 months.

Some lenders may also require that you continuously submit proof of Social Security income throughout the duration of the loan term.

Auto lenders and dealerships will also ask that you provide these documents in order to approve you for an auto loan.

Auto Loan Cosigner For Buyers on Social Security

One way to greatly increase your odds of approval for a bad credit auto loan on Social Security is to have a cosigner.

A cosigner is somebody who will “lend” you their credit so that you can obtain more favorable interest rates and loan terms.

A cosigner also helps by providing a source of income that is garnishable.

If you default on your payments while receiving social security benefits, your lender has the legal right to seek payment from your cosigner.

Buy Here Pay Here Dealerships for Social Security

One popular option for car buyers on social security is to purchase a car from a Buy Here Pay Here (BHPH) dealer.

These dealers rarely run credit, as all of the financing is done “in-house”.

However, it’s important to know that BHPH dealerships have strict requirements, such as bi-weekly payments that must be made at the dealership.

Final Note

If you are looking to buy a new car but have less than perfect credit, CrediReady can help. Our nationwide network of trusted dealers and verified lenders work with buyers in all credit situations.

Take a moment to fill out our free no-obligation loan inquiry form and start shopping for your dream car today!

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