It is quite easy to buy a car when you are unemployed, because many lenders are not too concerned about income verification or even a credit check. Unlike unsecured personal loans with no collateral, lenders can claim back your car in case you default on the monthly payments. Thus, car buyers are usually very careful in paying on time so lenders have very little risk exposure and are willing to give car loans with no job.
Car loan companies are more likely to finance unemployed car buyers because this is essentially a secured loan. The lenders get some collateral with the down payment car buyers must make for the car purchase. If you have noticed, many buy here pay here car lots allow anyone with bad credit to buy a car, as long as a substantial amount of money was put down. Similarly, lenders will expect car buyers with no job to put down more money for the new car purchase so that there are more car equity from day 1 and this helps to prevent your car loan from going upside down or underwater. Thus, do not believe that you can still buy a car with no money down for the unemployed.
Before you even shop for a new car, sit down and work out your budget first. Use an online car loan calculator to check what is the most expensive car you can afford to buy and then look for models that cost below that limit. Meanwhile, you also need to get guaranteed loans for the unemployed to pay for your car purchase. Note that you may not be able to get financed to the maximum limit because of your credit score or employment status or level of monthly income. In such cases, you may need to revise your target car and downgrade your choices for a cheaper car or used car.
It is better to get pre-approved car loans secured before you visit the car dealerships. What this means is that you negotiate with third party lenders and they mail you a check for buying a car, up to your determined credit limit. This is important when you are buying a car with no job. Many car sales people may not bother to serve you if you do not have any income. Another problem is that buy here pay here car lots with in-house financing come with rates that are very costly. So, for your own sake, look for third party car loan companies online. We have been duped before as it is very difficult to turn away the loan application form when your dream car is right in front of you.
A major factor that affects whether you can buy a car while being unemployed is your credit score. If you are still not behind any bills or credit card payments, your credit score will still be acceptable. Hence, if you are thinking of buying a car, get it done quickly before your FICO score is downgraded and lenders start to think twice before offering a car loan. Meanwhile, do not take a new unsecured cash loan if you cannot pay back in time.
You need to put aside some cash for paying the insurance on your new car as well as gas and other miscellaneous maintenance expenses. Accidents can end up very expensive, so you need at least liability insurance against such expenses especially when you have no job or income. Do not end up having to file bankruptcy because you are not able to pay for compensation in an accident where you are the at-fault driver. Look for a cheaper car to buy if you realize you do not have enough to pay for 1 year of auto insurance as well as the monthly car loans.
Many good paying jobs require you to have your own vehicle, so buying a new car can help you meet the minimum requirements and get employed. However, lenders can repossess your car in the event that you default on payments because your job search took longer than expected. This is why some think that it is too high risk to take a car loan with no job.