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Car Loans for Teachers – What to Know

Here at Motive Auto Finance, we understand that teaching is one of the most important professions there is, a way to shape and guide the next generation of American greatness. On the other hand, teaching unfortunately does not have a reputation as the most high-paying of jobs, particularly at the K-12 level, which can make it more difficult to get approved for a car loan.

Below are the typical criteria that must be met to secure financing from a traditional bank.

Typical Bank Approval Criteria for Teachers

  • Down payment:  10-20 percent, or $1000.
  • Vehicle age:  8 years old or newer.
  • Time on job:  at least one year at same school.
  • Time at residence:  at least one year.
  • Monthly income before taxes:  depends on lender, usually $1400 minimum.
  • Credit score/profile:  540 or above. Should have four paid as agreed lines of credit, one being an installment loan with twelve on-time payments of $150 or more.
  • Total debt to income ratio (including new payment):  preferably less than 36 percent, but some specialty lenders may allow up to 45 percent.

All of the criteria is interactive in that one aspect affects another. A high credit score (750 or better) will allow you to have less time one the job, a lower down payment, and stretch the DTI. On the other hand, a credit score under 680 will require more money down and a lower DTI.

Credit Unions Catering to Teachers

A credit union can be a great resource if you’re a teacher and need a car loan. There are credit unions specialize in making loans to teachers who do not meet the more stringent lending guidelines of traditional banks. These lenders take a more holistic approach and look at your application on a more individual basis than as a simple chance to make money. They often offer lower rates of interest, though they may not offer the conveniences of a larger bank or lender in terms of automated payments, online reporting, and other cutting-edge technologies. Go here to learn more about auto loans from credit unions.

Teachers with Bad Credit

If you’re a teacher and you have bad credit, you could be in a tight spot, as credit and income are the two most important factors in any auto lending approval process. Fortunately, we can help. We work with lenders and dealers all across the nation who work with damaged credit. When you fill out our online application, we match you with a local lending specialist who can help you get behind the wheel at a rate you can afford. Be sure to ask about special dealer incentives and discounts for teachers.