person handing car keys

by Aidan Kang, CFA
Senior Writer
UPDATED: September 23, 2021

In the United States, 93 percent of Americans have at least one vehicle. Americans have been so car-dependent that the United States exceeded Europe in terms of car dependency.

Cars cost money to buy so if you are unemployed yet dependent on a car you may be thinking, “How to get a car loan without proof of income?” Is it possible to get a car loan even if you’re currently unemployed? Are there opportunities available for people without stable sources of income?

Why Do Lenders Require You To Have A Job When Financing A Car? 

For lenders, income is a form of security. As long as you earn steady income, they have some assurance that you have the means to pay the loan installments. That’s why they prefer applicants who are employed. However, lenders also consider other factors like credit scores, other sources of stable income, and down payment, to determine if you can afford the auto loan.

Can You Get a Car Loan Without a Job?

Lenders get very cautious when they hear words like “unemployed” or “no job”. Well, you can’t blame them for thinking that way as it represents a higher risk to them for getting returns on their loans. However, you can still get a car loan even if you’re unemployed.

How can I get a car loan if I’m unemployed? It’s still possible to qualify for loans even if you’re currently out of work. Here are things you can do to improve your car loan approval odds.

Show Proof of Other Income Sources

Lenders will look at other factors if you’re unemployed but want to apply for car financing. Some financial institutions and lending companies accept other forms of income including:

  • Pension funds or other retirement benefit payments
  • Disability income
  •  Alimony or child support
  • Rental property
  • Regular proceeds from a trust
  •  Investment dividends
  • Pending sale of real estate, securities, or other investment property
  • An upcoming inheritance

Improve Your Credit Score

It’s possible to get a car loan even if you’re currently unemployed if you have a strong credit score. Lenders want to make sure that you can make timely regular payments by looking into your credit report. They want to see that you can manage your debt responsibly so they’ll check if you have late or missed payments. They also prefer credit reports without negative marks due to foreclosures or bankruptcies.

Find a Co-Signer

You may qualify for auto loans to fund your car purchase if you have a credit-worthy co-signer. A co-signer with a stable monthly income and high credit scores can help you in securing car loans even without a job. If the lender is confident with the added assurance you present to them, they can grant you the car loan even if you’re unemployed. 

Put in a Sizable Down Payment

You may also boost your odds of getting approved if you offer a larger down payment. Increasing the amount you put down means the lender needs to spend less by offering you a smaller loan. It’ll make the lender feel more confident that you can repay the money you borrowed.

Settle Your Existing Debts

Boost your chances of securing an auto loan approval by settling your outstanding debts. You should also avoid making multiple loan applications. Don’t forget to minimize your debt-to-income ratio and keep it below 40%.

What are the Types of Car Loan Options Available for Unemployed People?

Car loans differ in nature and terms. Choosing the best loan can make your life easier. So before you find out how to get a car loan without a job, you should first understand what kind of loan is best for your financial situation.

Secured Car Loans

A secured car loan is a loan that puts your car as collateral. Nowadays, typical banks and financial institutions offer this type of credit because it reduces the risk of non-payment and increases the chances of recoverability. Secured loans offer lower interests due to the reduced risk to the lender. Aside from lower rates, you can borrow higher amounts with a secured loan. 

In a repossession, banks or financial institutions will send someone to repossess your car. But, the creditor won’t sell your car immediately. It is still your right as a debtor to know your options on how to reinstate your loan.

Unsecured Auto Loans

Unlike secured loans which require collateral, unsecured loans don’t need one. Instead, creditors use your credit history to assess the level of risk in extending credit to you. But, here’s the catch. Unsecured car loans are less common, and if there is one, it’s hard to get or will inevitably mean a higher interest rate. Creditors find it hard to give loans without collateral since there’s no recourse if the debtor can’t pay. So if someone’s willing to provide you with an unsecured loan, consider taking it only after carefully examining the loan term. 

Overall, an unsecured loan is for the creditworthy only. So if you have no job with bad credit standing, you’re virtually immediately disqualified for it.

No Income Verification Loan

No income-no verified assets (NINA) loan or no income-verified assets (NIVA) loan apply for unemployed individuals. In this type, the creditor doesn’t require you to present any income proof as a requirement. They also won’t conduct verification steps similar to what banks normally do.

Institutions That Offer No Income Verification Loans

For no income verification loans, you can visit these sites to know more about this service. 

What to Watch Out for When Taking Out Car Loans?

There are certain gotchas in car loan applications that you should avoid. If you’re not careful in doing sufficient research before embarking on the process and not reading the terms carefully, you may fall victim to these things:

Predatory Lenders

Seeing an advertisement that says “low interest and no collateral loans” looks enticing. Still, be aware that lending offers that seem too good to be true often come from predatory lenders

These predatory lenders often charge punitive interest rates and impose high fees on their debtors. They often use “low interest offers” to lure the unwary to take up loans that may prove to be expensive and messy in the long run compared to more reputable lenders.

Differential Interest Rates

Unethical lending companies often use interest rates to gain undue advantage from you. They’ll charge high rates in case you skipped payments. So when agreeing to the terms, make sure you understand how interests change.

Spiraling Into Debt

Considering that you’re unemployed, you may have a hard time coping with heavy financial obligations. As a result, you may seek another creditor to lend you money and use it to pay off another credit. If the cycle continues, you’ll eventually get trapped into a debt spiral. So, be careful with your debt decisions.

Car Repossession

If you can’t pay your secured loans, banks will repossess your vehicle. They might tow your vehicle or disable it. Repossession can be tragic because you’ll lose your car, and you can only take it back if you settle your overdue balances. To know more about vehicle repossession, check out this website.

What Are the General Requirements to Qualify for Car Loans?

There are other general requirements you need to meet to qualify for car financing aside from having a stable source of income.

  • You should have a good credit score.
  • You must present proof of residence and a government-issued ID.
  • Get pre-approved for an auto financing.
  • Make a down payment.

Do Car Dealerships Verify Income?

Yes, car dealers will verify the monthly income of all their auto loan applicants. It helps them determine if the potential borrower has the means to make timely loan payments.


Getting a car loan without income and a cosigner can be a complicated process. It involves finding the right lending companies that will grant you a loan in spite of this, as well as ensuring you have thought through carefully how you will pay your recurring installments throughout the tenure. 

We have shown there are different avenues for getting a loan, even if you’re unemployed. But as the saying goes, “there is no free lunch” so you should always remember that there are risks and cautions in these types of loans. So always practice diligence and care before signing the loan agreement regardless of your employment status.