Being unemployed or furloughed is tough. You thought you had job security, and then one day, you got laid off, fired or furloughed due to company problems, issues with your performance or the pandemic. Now, along with being worried about how you’re going to pay your bills like other unemployed and furloughed workers, you’re wondering: “Can I get a car loan on unemployment?”

Before you go car shopping, understanding how car loans work and determining if you can get one after losing a job is critical. Then, you will know what the future holds and whether or not you need a plan B.

How Can I Get a Car Loan if I’m Unemployed?


Car loans for unemployed people do exist. Whether you’ve lost your job altogether or you’ve just been furloughed, you can try to get a car loan when you go to the dealer or attempt to get approved online by filling out an application with a lender before you go in. Getting a car loan without a regular job depends on several factors including whether you have other income sources or assets and your credit score.

Here are four ways in which you can possibly find car loans for unemployed individuals.

1. Compile Your Other Sources of Income

If you have income from other sources than a job, that could help you snag a car loan. These sources could include:

  • Alimony
  • Rental properties
  • Pension
  • Social Security
  • Regular proceeds from a trust
  • Veterans affairs benefits
  • Investment dividends

Additionally, some lenders might accept an upcoming inheritance, a pending employment offer or independent contractor agreement or the pending sale of investment property, real estate or securities.

If you’re wondering, “Can I get a car loan with unemployment benefits?” then note that these checks will likely not help you. A lender will want to see consistent proof of income that you’ll be receiving in the long term. Unfortunately, unemployment checks are only temporary and not meant to hold someone over for too long. If you’re going about getting a car loan on unemployment income alone, you probably won’t be approved.

2. Find a Co-signer

If you have a loved one like a spouse or a parent with good credit and a steady income, you could ask them to be your co-signer on a loan. If the co-signer has an excellent credit score, you may even get a better interest rate on your loan. Just keep in mind that if you miss your payments, then both of your credit scores could decrease. You’ll want to only co-sign with someone who knows you are trustworthy and reliable.

3. Look Into Your Credit Score

If you have a good credit score, you’ll have a much better chance of getting a car loan. If your score is excellent, your interest rate may be low as well.

Credit scores range from 300-850. The ratings look like this:

  • 300-579: Very Poor
  • 580-669: Fair
  • 670-739: Good
  • 740-799: Very Good
  • 800-850: Exceptional

You can check your credit score for free on sites like Experian and Credit Karma. Though bad-credit car loans are available, they come with less-than-perfect terms. Before shopping for a car, you may want to increase your score by paying off your debts, examining your credit history to see if there is any incorrect information being reported and paying your bills on time before you try to buy a car. Closing down credit cards could cause your credit score to drop (the longer your credit history is, the better). Hard inquiries into your credit — which occur when you apply for some types of loans and cards — could also temporarily decrease your score.

4. Save up Cash

If you save up a considerable amount of cash and make a big down payment, then you won’t have to take out as big of a loan and could be more likely to get approved. You could set aside a certain amount of money every month from your unemployment checks and other sources of income to save.

Consider buying a used car instead of a new one since it will be cheaper and more attainable. You could always look at the Kelley Blue Book to see prices of new and used vehicles, and when you go into the dealer, you can show them the Kelley Blue Book value to negotiate. For example, if they’re trying to sell you a used car that’s $3,000 above the Kelley Blue Book value, you could play hardball and tell them you won’t purchase it unless they lower the price.

Whether you’ve been furloughed due to the COVID-19 pandemic or just lost your job, these strategies can help you in your attempt to get a car loan. However, you’ll need to keep in mind that the terms of your car loan could potentially be less than desirable.

What Your Car Loan Agreement Could Entail

Since you’re unemployed, your lender may consider you a high-risk borrower, and your car loan agreement might not be ideal. For instance, the lender may want you to pay back your entire loan in a shorter amount of time, require you to set up automatic payments, give you a lower loan amount than you need or charge a higher interest rate and origination fees.

You may be able to refinance your loan down the line once you get a new job and increase your credit score, which could bring your interest rates down and make your loan more affordable.

Getting Car Insurance When You’re Unemployed


You must purchase car insurance when you get a car. If you’re buying auto insurance while being furloughed or unemployed, you don’t have to worry about higher rates. Car insurance providers won’t look at employment, but they will look at factors like your age, driving record, location, car make and model and credit score to determine your monthly insurance premium.

To save money, you might want to purchase only the legally required liability car insurance amount required by your state. For example, in California, you’ll need to have at least $15,000 per person for bodily injury liability coverage, a $5,000 minimum for property damage liability coverage and $30,000 for injury or death of more than one person.

Since you’ll be making car payments, your lender will likely require you to carry collision and comprehensive insurance on the car. By raising your deductible, you can get a lower-priced policy. Your lender may encourage or require you to obtain GAP insurance, which will cover the cost of the difference between the value of the vehicle and the amount still owed on the loan in the event of an accident where the car is totaled.

Compare car insurance quotes to see which companies offer the best rates, as well as look into discounts by bundling your policy and signing up for autopay. When you speak to your potential car insurance provider, ask about any other company-specific discounts that could be applied.

If you do some research prior to going to the dealership, you could save yourself a lot of time, money and energy. Although you’re unemployed or furloughed right now and things are more difficult, you may just be able to get that car loan you need and the car insurance that’s best for you and move forward with your life.

About Christopher Boston

Christopher Boston headshot

Christopher (Croix) Boston was the Head of Loans content at MoneyGeek, with over five years of experience researching higher education, mortgage and personal loans.

Boston has a bachelor's degree from the Seattle Pacific University. They pride themselves in using their skills and experience to create quality content that helps people save and spend efficiently.

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The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.

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