How to Get a Car Loan When You Only Have Unearned Income

Unearned income generally refers to investment income or income you don't physically work for. A bank wants to ensure that a car loan will be repaid. However, banks do not rely exclusively on earned income. Some forms of income represent a stronger guarantee of repayment than earned income sources.

Investment Income

Investment income generally may be included on a car loan application if this is your primary source of income. Car loans are normally secured, so the lender takes less risk than with an unsecured loan. When you apply for a bank loan, you would tell the loan officer that your primary source of income is from investment activity. If your income is from fixed interest investments, this is even better. The bank can depend on money you receive for income derived from bank certificates of deposit (CDs), fixed bonds and other investments paying a guaranteed rate of return.

Social Security

Social Security is a fixed-income source. This money is a form of government pension you are eligible to receive when you turn age 62. The bank will accept this form of income for a car loan in most cases, because this income will not run out prior to your death. You'll have to prove that you are receiving Social Security payments.

Pension

A pension is a retirement income you receive from your employer. The pension payments are considered unearned income. However, this income is guaranteed by the pension plan. Because of this, the plan serves as a stable source of income you can use when applying for an automobile loan. As long as the pension is a lifetime pension or a pension lasting for at least as long as the term of the loan, your loan officer is likely to accept this as an income source.

Annuity Income

Annuities also represent guaranteed income sources. For this reason, applying for a loan by citing annuity income as part of your total income should help you secure a bank loan, assuming your total debt-to-income ratio and creditworthiness make you a good risk for the bank. Like pension income, the annuity must cover at least the term of the loan to be considered as a viable income source on the application.