"How much income is needed to qualify for a $300-per-month car loan? "

"I have a credit score of over 700, no recurring monthly expenses, and a stable job. I could easily afford a $300-per-month payment. The problem might be that I only make about $1,000 per month, and I don’t have any money saved for a down payment. Is my monthly income just too low?

"

Answer provided by
avatar
Johnny Puckett
Answered on Apr 26, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
“Every lender is different, but usually the cutoff is around $1,300 per month. That being said, if you are able to find a bank that will lend to those who make less than that, there are usually other factors to consider.
For example, there’s a rule that banks require a maximum debt-to-income (DTI) ratio of 45%, including the car payment and car insurance. Also, a car payment cannot account for more than 20% of a borrower’s income.
So if you make $1,000 per month, you could only afford a $200 car loan payment. This is backed up by the 45% DTI rule, which in your case would allow you to have only $450 of monthly expenses, including the car payment and insurance. After a $200 car payment and roughly $100 in insurance, you are left with $150 to cover housing.
Bottom line: it may be possible for you to get an auto loan, but it would probably be a better idea to hold off until you’re making more money and you have saved for a down payment. “
thumb-up

Did this answer help you?

Ask us a question by email and we will respond within a few days.
thumb-up

Have a different question?

You can meet us at our office and discuss the details of your question.

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies