Answer: There are many people out there who work hard every day to earn a good living, but never pay taxes. They take a hefty percentage of their income in cash and never report their earnings to the IRS, (aka getting paid “under the table.”) These folks are typically considered to be part of the “underground economy.”
All kinds of non-illicit workers can fall into this category, including nail technicians, hair stylists, waiters, and baby sitters. And just like members of the traditional economy, these workers need to get auto loans from time to time. You might think that dealerships would be quick to turn down members of this economy, but it turns out that they have as much of a chance of receiving financing as anyone else — anyone else with good credit, that is.
“If you are a credit-worthy person and you can prove that you have paid your auto bills and other bills without a problem, people don’t care where [the money] comes from,” says Gary Flom, president and CEO of multiple auto dealerships throughout New York, including Jaguar Land Rover Manhattan. “If you’re just starting out, then it matters, and they will take into consideration your income, credit status, etc.”
If your credit, however, is on the not-so-perfect side there is still hope. Finding a co-signer (someone who agrees to take over your auto loan payments if you are unable to make the payments yourself) may be your best bet. But that person must be deemed “qualified” by the lender.
“A qualified co-signer meets the same qualifications as any approved borrower,” says Todd Nelson, business development officer at LightStream, the online lending division of SunTrust Bank. He contends that individuals with good credit usually have several years of credit history with a variety of account types, such as major credit cards, and few delinquencies or other problems repaying debt obligations. Stable, sufficient income and assets are also a plus. “Each individual situation is different and … we make our credit judgment based on the specific facts of that situation,” he said. “Ultimately, our determination of good credit is based on whether we conclude that there is a high likelihood that our loan will be repaid in a full and timely manner.”
If you do talk someone into co-signing for you, there is the possibility you could take over the loan by refinancing it in your own name later, but that’s a long shot. “It is not practical,” Flom said. “The reason being is that it takes about a year or two of paying bills on time for the credit score to be affected. Meanwhile, the life of car loans are typically rather short, and therefore by the time the credit score increases, the loan is often times almost over.”
This situation only reiterates the fact that a good credit score is essentially your ace in the hole and can help stop financial problems before they even have a chance to start. So keep those credit card and cell phone bills paid on time every month, and you can increase your changes of getting a good financing deal and driving off the lot in a newer, better ride.
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