How to get a car loan without a job


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If you’re unemployed, you may wonder if it’s possible to get a car loan with no income. This post will walk you through that scenario as well as ones in which verifying your income is the challenge to finding a loan that fits your financial situation.


Related: Pros & cons of a weekly budget


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Can I Get a Car Loan With No Income?

First, there is a difference between a car loan with no income and a no-income-verification car loan. They definitely don’t mean the same thing. The first is suggesting that you have no income while the second seems to say that it will be difficult to verify your income. Plus, having “no income” can mean that you have no income coming in from paid employment (but you may have income from other sources), or it could mean literally no income at all.


In general, lenders want to minimize their risk by approving loans where the borrowers will pay what they owe on their car loans and not approving ones where the consumers won’t have the capacity to make that happen. How each lender defines “income” and what’s considered to be enough can vary significantly by the financial institution.


To help, in this post, we’ll explore nuances of what a car loan with no income really means and what your options might be.


If you’re wondering how to get a car loan with no proof of income whatsoever, then you may have more success at a local dealership that both sells and finances its vehicles. When you go that route, you’ll make payments directly to the dealership rather than go through another financial institution. But be aware: These types of loans typically come with higher interest rates and fees. The repayment term and warranties may be shorter, and repossession may happen more quickly if you can’t meet your monthly obligation.


Next up are other ways to consider when you want to get a no-proof-of-income car loan from a financial institution.

Getting a Car Loan With No Proof of Income

Because lenders want reassurance that you’ll be able to pay back a car loan, if you have no proof of income, you may need to go one of these routes to get your loan approval.

1. Cosigner

When you have limited income or can’t prove your income, a cosigner might be the right solution to get a car loan approval. A cosigner is someone who agrees to share the responsibility of paying the car loan and, if the cosigner’s financial and credit scores are acceptable to the lender, this may lead to loan approval even when you can’t verify your own income.

2. Cash-Out Refinance

If you already own a car and want to tap into its equity to get cash for another purpose—medical bills, perhaps or home repairs—then this is a cash-out refinance. Overall, car values are higher now than they’ve been, which means that you may have more equity available in your vehicle to cash out than you realize. You could also combine these two strategies and use a refinance cosigner.

3. Good Credit Score

Lenders look at two main factors when deciding whether to approve a car loan: income (which, for the purposes of this post, is problematic) and credit scores. So, if one of the two main factors—a person’s credit history—is acceptable to a lender, this may help to overcome some of the challenges with the other factor: income.

4. Other Income Sources

Perhaps when you say you have “no income,” you’re referring to job-related income. And although individual lenders have their own requirements for their car loans, there are other forms of income that they’ll likely consider. These can include retirement/pension income, as well as disability and Social Security income or money from investments, including rental properties.


If you’re self-employed, even part time, you can often use this income to qualify. You can list child support and alimony, too, although you aren’t required to disclose these types of maintenance support income.


If you aren’t sure whether you’ll meet the guidelines for a particular lender, then requesting an auto loan preapproval can help. In this process, the lender will let you know what general kind of offer they’re likely to make, including the amount they’d be willing to finance. This is a conditional offer, but preapproval estimates can still provide helpful benchmarks for you as you seek to get an auto loan.

How to Refinance a Car

Here are tips if you want to know how to refinance an auto loan. Ahead of time, you’ll want to find out if they offer no-income verification car loans; whether you meet their requirements, including credit scores; and what the refinance costs might be. Also, check to see if your current lender charges a prepayment penalty. If so, is refinancing still worthwhile?


Refinancing using the same lender can be easier because that lender will likely already have information about your vehicle and your current loan, including the payoff amount. Just because it’s easier to use the same lender, though, doesn’t necessarily mean it’s the best deal for you. By shopping around, you may be able to find a better one. If so, it’s not that much extra work to provide vehicle and current loan information to your new lender.


Some people refinance to obtain lower car payments. If that’s your goal, then check to make sure that the interest rate and term available will allow you to accomplish this, and that fees charged won’t cut too much into savings.

Where to Get a Car Loan With No Income

When you’re looking for a no-proof-of-income car loan, you may need to use one or more of the strategies discussed in this post.

The Process to Get a Car Loan With No Income Verification

Here, in general, is how auto loans work. After choosing a vehicle and a lender, you fill out an application. The lender will want to see IDs to verify your identity and proof of your address (as well as previous addresses if you haven’t lived in your current one for long). You’ll provide information about your employment (or current lack of employment/previous employers), income information and details about your debts. The more information that you have gathered ahead of time, the easier the process will be.


As far as how to get a car loan with no proof of income, talk to your lender of choice about the strategies listed in this post, from getting a cosigner to finding ways to verify income that doesn’t come from a job. Not all lenders will be open to making this type of loan, and those that are will have different requirements and processes.

The Takeaway

There can be significant differences between getting a car loan with no income whatsoever and getting a no-income verification car loan, with each person’s financial situation driving the situation. Someone might get loan approval when they aren’t currently employed if the person has other income sources. There’s also getting a cosigner. This can be true when buying a car and when refinancing one.


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Paying tax on personal loans


There are plenty of reasons to take out a personal loan, many of which are totally financially savvy. For instance, you might be thinking about consolidating high-interest debts like credit card balances.

Or you might plan to borrow in order to repair the roof or remodel the kitchen to help increase your home value.

Maybe you’re considering taking out an unsecured personal loan to pay for an unexpected medical bill.

Whatever the case, personal loans can be a useful tool to help you cover expenses and stabilize your finances. Plus, they may be easier to qualify for than other types of loans and come with less red tape.

But as in all things finance, Uncle Sam wants his cut, too. So, as you consider your borrowing options, you might wonder about how taxes work on unsecured personal loans.

For instance, you may question if a personal loan can be taxed as income and whether you can get a personal loan interest tax deduction.

If you are trying to decide between several types of financing, reviewing the potential tax implications of each borrowing option can help you figure out a financing strategy that fits your situation.

In this article, we’ll cover things you’ll likely want to know about when it comes to tax on personal loans, including whether personal loans qualify as income, and whether the interest on them is tax-deductible.

Plus, we’ll cover some scenarios that can come with tax benefits that might apply to you and your loan. This way you’ll be armed with helpful knowledge useful when making the right borrowing decisions for you.

It is, however, important to note that we’re not tax experts. For any tax-related questions or advice, you’ll want to consult a tax accountant — and not a blog post like this one.

Related: A guide to understanding your taxes




When you take out a personal loan, your lender agrees to loan you a particular amount, and you agree to pay that loan back over a set period of time with interest.

Which is actually good news on the tax front: Even though it seems like a windfall that you could be taxed on, it isn’t. Since you are agreeing to pay that money back, it does not qualify as income the way wages from a job would.

The only instance when money from a personal loan can be taxed as income is if your lender agrees to forgive the loan. Loan forgiveness can be a rare occurrence and typically occurs under the following circumstances:

  • You are renegotiating the terms of a loan you are struggling to repay.
  • You’re declaring bankruptcy.
  • Your lender decides to stop collecting on the loan.

This is called a cancellation of debt, and it can carry tax liabilities since you’re receiving the remainder of the loan without the caveat that you’ll be paying it back.

For instance, let’s say you’ve taken out a $10,000 personal loan and have paid back $8,500 of it when the debt is forgiven or cancelled. The remaining $1,500 that you’d no longer have to pay back can be taxed as income during the year it is cancelled.

Typically, your lender will send you a tax form (a 1099-C) stating the amount cancelled, which you must subsequently report to the IRS on your tax return. Again, this is a very, very rare circumstance, so it’s nothing to count on.

Bottom line: In most situations, personal loans are not taxable as income — but if your loan is cancelled or forgiven, the remainder of the loan amount that you’ve yet to repay can be taxed the same way regular income is.




The IRS regulates which types of loans come with tax deductions. While there are some types of loans that have tax-deductible interest, unfortunately, personal loans don’t fit into that category.

The interest you pay on personal loans is not tax deductible. So, if you take out a loan and pay a few hundred dollars in interest over the course of your repayment, that’s not a cost that will reduce what you owe in taxes come April.


Although personal loan interest isn’t tax deductible, there are many other types of loans that do carry special tax benefits and interest deductions. For instance, student loan interest and mortgage and property loan interest can be deductible up to certain amounts, although there are some restrictions.



Michael Krinke


You may deduct up to $2,500 of interest on qualified student loans or the full amount you paid during the tax year,whichever is the lesser.

However, this deduction is gradually phased out as your income increases, and it is not available if you or your spouse can be claimed as a dependent on someone else’s tax return.


fizkes / istockphoto


In the majority of cases, you can deduct every cent of interest you pay on your home mortgage. The loan must be secured (that is, your home must be offered as collateral on the loan; this deduction will not work if you use an unsecured personal loan to cover some or all of the cost of your housing).

As of 2018, you can deduct the interest on up to $750,000 of a qualified home loan if married and filing jointly, or up to $375,000 of qualified debt for single filers. (These limits were lowered from $1 million under the Tax Cuts and Jobs Act of 2017, but if you signed your mortgage before December 16, 2017, you’re grandfathered into the previous limit.)


Some business expenses are tax deductible, and that includes the interest you pay on loans taken out for business-related purposes. However, you can also deduct business expenses you pay for using an unsecured personal loan, which we’ll dive into a little bit more deeply in the next section.


Although staying debt-free is standard financial advice, sometimes taking out a personal loan can be a smart money move, especially if you’re already dealing with high-interest forms of debt, such as consumer credit cards.

Debt consolidation, a financial tactic, which involves taking out one large loan to cover multiple smaller debts, may reduce your credit utilization ratio and potentially help you save money on interest, not to mention make your bill-paying schedule a whole lot simpler.

For example, maybe you owe $8,000 on one personal credit card and $4,500 on another credit card, both with high (and different) interest rates. With multiple bills coming due at different times of the month, chances are you’re only paying the minimum required amount on each of them, which means you’re paying them off slowly and paying a lot of interest.

However, if you were able to qualify for and take out a $12,500 personal loan at lower interest rate, you’d only have to worry about one payment date, and you might even save money on the sky-high credit card interest rates, which could simplify both your life and your finances.

Personal loans (home improvement loans) can also help you get started on major home renovations, which may increase the value of your house and help you earn back your investment in the form of equity.

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originally appeared on and was
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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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