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Car loans for single parents
How to finance a family car when you only have one income coming in.
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%||Read more|
|Unsecured car loans||Up to $50,000||5% to 36%||Read more|
|Personal loans||Up to $100,000||5% to 36%||Read more|
|Car leases||Full value of vehicle||3% to 10%||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.
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.
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