A car salesman reveals the three income streams that\u2014combined with bad credit\u2014will get you denied at the dealership virtually every time. Here\u2019s the list and what you can do if your job or source of income falls into one of these categories.<\/p>\n
TikTok creator Chevy Dude (@chevydude) posted a video with the list earlier this week. \u201cIf you have one of these jobs, the likelihood of you getting a car loan is probably pretty low if you don\u2019t have excellent credit,\u201d he says to start the video.<\/p>\n
Chevy Dude explains, \u201cIf the bank keeps telling you no, it might not just be your credit score: it\u2019s what you do for a living. Banks don\u2019t just look at your credit. They look at how you get paid, and certain income types combined with bad credit will get you denied every single time.\u201d<\/p>\n
The first category of income that Chevy Dude lists is contract or 1099 work. \u201cIf you don\u2019t get a traditional W-2 from your job, \u2026 you don\u2019t have traditional pay stubs,\u201d he says. \u201cThe bank wants two years of tax returns. If you just started at this job, good luck. They\u2019re not going to do it.\u201d<\/p>\n
That dynamic can compound depending on your tax situation. \u201cAnd if you wrote off a lot of expenses, …\u00a0 your income looks tiny on paper. Bad credit on top of that? Most lenders won\u2019t touch you,\u201d he says.<\/p>\n
The next category is traveling jobs that give employees a vehicle allowance. Chevy Dude explains why.<\/p>\n
\u201cThis one is sneaky,\u201d he says. \u201cI see a lot of places going away from giving you a company car and making you drive your own. You think $500 or $600 a month allowance helps you, but the reality is your car is getting hammered with \u2026 maintenance repairs.\u201d<\/p>\n
That leads to many people, in his experience, spending more than their allowance on repairs. \u201cSo when it\u2019s time to buy a car, there\u2019s no savings, the vehicle is worn out, worth very little, or you have a ton of negative equity and the bank still sees bad credit,\u201d he says.<\/p>\n
\u201cAnd then there\u2019s Social Security income,\u201d Chevy Dude says. \u201cThe average payment is somewhere between $900 and $1,400 a month. With vehicle prices where they are right now, that income alone makes it incredibly hard to hit the debt-to-income ratio most lenders require.\u201d<\/p>\n
Don\u2019t mistake him, though. It\u2019s not that no one on Social Security can get approved for a car loan.<\/p>\n
\u201cI\u2019m not saying it\u2019s impossible. I\u2019m saying the math really is hard to make work, especially when credit is always a problem,” he says.<\/p>\n
To end the video, Chevy Dude says, \u201cIf you\u2019re in one of these situations, you need to know that going in so you\u2019re not walking out confused and frustrated.\u201d<\/p>\n
In the comments section of the video, viewers shared their experiences seeking auto loans while being self-employed.<\/p>\n
\u201cI\u2019m self-employed and I have no problem getting an auto loan,\u201d said one viewer. \u201cBut when it comes to mortgages or any other traditional loans, I can\u2019t get them.\u201d<\/p>\n
A second person said, \u201cI have never had a bank ask for proof because of my credit.\u201d<\/p>\n
A third person said, \u201cYeah, being self-employed is a difficulty but if you print off and pay your self-employment taxes quarterly you are usually good.\u201d<\/p>\n
Chevy Dude is right when he says that it is still possible to get a car loan as a freelancer with 1099 income, especially when you have the right credit score. According to Experian<\/a>, workers in this situation need to provide extra proof of income and potentially fill out some extra paperwork to secure the loan.<\/p>\n When it comes to financing a vehicle with an employer allowance, a Reddit user on this thread<\/a> posted to r\/personalfinance two years ago discussed why banks might be wary of that arrangement. \u201cThe money is going to you, not them, so there is a possibility that you wouldn\u2019t pay them,\u201d the user wrote. \u201cYou are only receiving that payment while you are employed with that employer. If you are laid off, that payment disappears (so your credit score becomes more relevant).\u201d<\/p>\n