Car loans for single parents

As a single parent, it can be difficult to find a car loan you’re eligible for if you can’t meet a lender’s minimum income requirements. But that doesn’t mean it’s impossible. There are lenders out there willing to work with low-income borrowers — especially if you have a good credit history.

Why might a single parent not be approved for a car loan?

Although it’s illegal for lenders to discriminate based on marital status, it can be difficult to qualify for a car loan as a single parent if you don’t have a strong income. Many lenders have minimum requirements that can be difficult to meet on a single income — especially if you’re only working part time or on government assistance.

However, this doesn’t mean you can’t be approved. If you have sufficient income and a good credit history, you’ll likely still be able to qualify for many car loans.

Compare car loan options

Check out the requirements for each car loan provider before applying.

Car loan types to consider

From traditional secured car loans to leasing a car through a dealer, you have a few options to consider as a single parent.

Loan type	Loan amount	Interest rates	Loan features
Secured car loans	$3,000 to $100,000	4% to 13%	Uses your vehicle as collateral. Lower interest rates. Larger loan amounts available.	Read more
Unsecured car loans	Up to $50,000	5% to 36%	No collateral required. Doesn’t require full insurance coverage. Interest rates tend to be higher.	Read more
Personal loans	Up to $100,000	5% to 36%	Can be both secured and unsecured. Few restrictions on loan purpose. Competitive interest only available to those with good to excellent credit.	Read more
Car leases	Full value of vehicle	3% to 10%	Restrictions on mileage. Low monthly payments. May require a steep initial fee. Won’t own car at the end of your contract.	Read more

How can I compare my car loan options?

Keep these factors in mind when comparing your car loan offers:

• Eligibility criteria. Most lenders have minimum income and credit score requirements to qualify. Reach out first to make sure you’re eligible before filling out a full application.
• Interest rate. Interest accounts for the main cost of your car loan and can be fixed or variable. Fixed rates stay the same throughout the life of your loan and can be easier to budget for. Variable rates can go lower — or higher — than fixed rates based on changes in the lending market.
• Fees. Ask about any origination, late payment or NSF fees you may incur. Some lenders also charge a prepayment penalty if you make extra payments or pay off your loan before your term is up.
• Loan terms. Most car loans come with terms from one to seven years. Choosing a longer term can make your monthly payments more affordable, but you’ll pay more in interest in the long run.
• Required add-ons. Some lenders require you to have full-coverage auto insurance or GAP insurance to cover you in case your car is totaled or stolen. Consider these extra costs when figuring out how much you can comfortably afford to borrow.

What should I be aware of?

When comparing your car loan options, make sure you check the reputability of the lender before applying. Some may claim to help single parents, but then charge high fees and rates that can be difficult to afford.

Instead, stick with a bank, credit union or reputable online lender. These tend to offer lower rates, and some may even be flexible with late payment fees if you have a history of on-time repayments.

You should also consider applying for preapproval, which allows you to check what rates and fees you might qualify for before filling out a full application. Having too many credit applications on file can lower your credit score, which can hurt your ability to qualify for lower rates.

Compare more car loan options

How do I apply?

Many lenders allow you to apply online, though some banks and credit unions may ask you to visit a branch in person to fill out an application. While required information and documents varies by lender, you’ll typically be asked to provide:

• Government-issued ID. Have your driver’s license or passport on hand when applying.
• Proof of income. Many lenders will ask to see recent pay stubs or bank statements to confirm your income.
• Proof of residence. This can include your current lease, mortgage statement or a utility bill to prove you live where you say you do.

Some online lenders may be able to provide an answer almost immediately, while banks and credit unions can take as long as week to get back to you with a decision. Once approved, you typically have around 30 days to find the car you’d like to purchase and finalize the loan.

Bottom line

Being a single parent doesn’t have to limit your car loan options. If you have adequate income and a solid credit history, lenders will consider you just as they would a married couple or borrower without children.

To ensure you’re getting the best deal out there, compare your options with our guide to car loans.

Frequently asked questions

• How much should I spend on a car loan?

  Most recommend spending no more than 10% to 20% of your monthly budget on your car, including your car payment, gas, maintenance costs and insurance premium. As a single parent, it might be better to err on the lower side of this estimate — especially if you’re buying a used car. This way, if anything goes wrong, you’ll have extra funds available to cover the worst-case scenario.

• Should I lease my next car?

  It depends. Leasing can help lower your monthly payments, but it often ends up costing more than a car loan in the long run. You’ll also need to have an upfront payment — similar to a down payment — that you won’t get back. This means you’ll be spending money without the added benefit of owning the car in the end. This could put a hole in your savings without giving you the ability to trade in your vehicle later on down the road.

• Can I finance a used car with a car loan?

  Yes, but most lenders put restrictions on the age and mileage of the car, and they tend to come with less-competitive interest rates. However, a used car’s lower sticker price could pay off in the long run.