Does Unemployment Count as Creditable Income for a Car Loan?

A person who loses his job may still need to purchase an automobile. Rather than spend cash to buy the car, the person may wish to take out a loan to help with the purchase. However, this may be difficult, as many lenders prefer that people who take out car loans have a steady income. Unemployment benefits may count as income in some contexts, but because they are temporary, lenders may or may not consider them creditable.

Car Loan Criteria

When a person applies for a car loan, the lender will want to be reassured that the person is capable of paying them back the money that they borrow. The potential buyer will be asked to present a number of different documents related to their financial health and credit history. People with more money and higher credit ratings are generally offered more loans at lower rates of interest.

Income

Income counts as one of the primary determinants of whether a person is eligible to receive a loan. This is because a steady source of income is considered critical to helping a person pay back a loan. If a person lacks a steady source of income, he is more likely to have to pay higher rates of interest, as the loan is considered riskier, or he will be denied a loan entirely.

Unemployment Benefits

A person who receives unemployment benefits is likely earning an income that is only a portion of what he was making prior to losing his job. In addition to this income being relatively small, lenders may be wary of lending to someone who is surviving on employment, as unemployment benefits can only last -- as of April 2011 -- a maximum of 99 weeks. Most car loans last longer than this.

Considerations

While lenders may be wary of lending to someone who is surviving on unemployment benefits, the risk that goes with a small, temporary source of income may be offset by various other factors. For example, a person may have an extremely high credit rating, a large bank account or other assets that he can cite as proof of his ability to pay back the loan. This may make the loan less risky and qualify him for a lower rate of interest.