You can get a car loan if you have just started a new job. Lenders consider the length of employment, but it is not the only factor.
Banks also look at credit score, debt-to-income ratio, and down payment.
It is okay if you have not worked long at your current job. Ensure you excel in one, two, or three of the other areas.
A new job does not prevent you from getting approved. However, you must show that you can repay the loan on time every month.
Job Length and Credit Score
Your credit score affects how long you need to be employed to get an auto loan. Lenders use credit scores to predict if you might miss payments in the next year and a half.
High Score
You might get a car loan if you just started a new job and have a very good credit score. An excellent credit score helps even more. Drivers with scores above 740 fall into this category.
For example, my score was over 800 when I financed my current car. The lender did not mind that I had just started my own business and was not making money yet.
My record of on-time payments and good credit use was enough for the lender to approve the loan without more questions.
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Low Score
You might need at least six months at the same job to get an auto loan with a fair or poor credit score. Auto shoppers with scores below 670 fall into this category.
Auto lenders often verify income and job status for applicants with lower credit scores. Drivers with short job histories can still get loans by making a hefty down payment or keeping their debt-to-income ratio low.
Job Length and Down Payment
The size of your down payment affects how long you need to be employed to get an auto loan. Lenders are more likely to approve applicants who make a large deposit.
Large Down Payment
You might get a car loan if you just started a new job and make a hefty down payment of 20% or more. Saving enough money demonstrates stability and financial discipline.
Trading in your old car counts as a down payment. Don’t be discouraged if you are still in the probationary period with your employer.
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No Money Down
You might need at least six months at the same job to get an auto loan without a down payment. Lenders are hesitant to approve borrowers with a 100% loan-to-value ratio.
Buying a car with no down payment is tough because new vehicles lose value quickly. People are more likely to default when they owe more than the auto is worth. Lenders can repossess the car, but they prefer on-time payment.
Job Length and Debt-to-Income
The projected debt-to-income ratio (DTI) affects how long you need to be employed to get an auto loan. Lenders calculate DTI to see if you can afford the monthly payment.
Lenders calculate DTI to measure the affordability of the projected monthly payment. DTI is a fraction dividing monthly debt service by income.
| Numerator: Monthly Debt Service | Denominator: Total Monthly Income |
| Housing costs (rent or mortgage) | Employment |
| Long-term installment obligations | Housing Choice Vouchers |
| Minimum payment on revolving accounts | Social Security Disability |
| Alimony and child support payments | Child support and alimony received |
Low DTI
A low DTI helps you get an auto loan if you just started a new job. Lenders are more likely to approve applicants who can afford the monthly payment.
You control the price of the vehicle you choose, so pick one that fits your budget. An economy car might be better than a luxury car with premium features.
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High DTI
You might need at least six months at the same job to get an auto loan with a high DTI. Drivers with DTIs between 35% and 55% fall into this category.
Getting a car loan with a high DTI is challenging if you can barely afford the monthly payments. Lenders see more risk if you have a high DTI and a temporary job or short job history.
Consider getting a co-signer or choosing a cheaper car to reduce lender risk.
