Child support payments can make a second chance auto loan more difficult to obtain, even if you are receiving those payments. Here is why.
When you are on the receiving end of child support payments, you might think that it is good news for your debt to income ratio. On that side you are right, but since child support income cannot be garnished, second chance auto lenders may be hesitant to consider it as part of your overall income. There are specific conditions under which a lender may consider your loan if child support payments are involved:
- The borrower has additional income that can be garnished
- Long-term residence stability and “situational” bad credit versus “habitual” bad credit
- You can provide proof of your child support income: copies of the court order or divorce decree stating the amount and length of your payments.
When you are on the paying side of the child support, owing arrearage can prevent you from getting a second chance auto loan. The reasoning is simple. People who avoid making child support payments tend to change jobs frequently and statistically will not make their loan payments on time.
Child support can make obtaining a second chance car loan even more difficult. Your best chances revolve around having your payments caught up and at least one year on your current job. Responsibility with child support payments can be used to demonstrate responsibility with a car loan.