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Buying a car when you must rely on Social Security disability benefits is never easy. Lenders and dealers prefer shoppers who are gainfully employed and have money to spare after funding their food, clothing, and shelter needs each month.

Social Security benefits cover these necessities for disabled individuals with little funding left over for other uses such as transportation. Therefore, a strategy to get you behind the wheel could help you then drive out of the showroom.

The Social Security Administration (SSA) runs two disability programs with different benefit levels and rules: SSDI and SSI. Find unique car buying tips for each below.

Buying a Car While on SSDI

Individuals on Social Security Disability Insurance (SSDI) can buy as many autos as they can afford to drive, garage, and maintain. The rules place no limit on resources because these recipients paid into the system via FICA payroll taxes while working.

Of course, with an average monthly SSDI benefit of only $1,200 per month, affording just one reasonable vehicle will prove challenging. But you have an enormous advantage: the federal government can print money, which means the checks keep coming – even during a recession or pandemic.

Lenders love reliable income streams!

Payments

Request a secured car loan (Affiliate Link) from an online lender network, which could be the best place for a disabled person to find a willing partner. Volume improves your chances.

Also, attempt to finance a vehicle priced to fit your limited budget. Since your SSDI benefits are fixed at a deficient level, it is critical to choose an auto with a sticker price that keeps your monthly payment extremely small.

Lenders are most likely to approve a financing request when income is sufficient to handle the projected monthly payment comfortably. Several factors determine what you will have to pay each month – but you can only alter one in the short-term: price.

  • The down payment amount is often minimal for low-income shoppers
  • The original loan amount is the vehicle price minus the deposit – if any
  • Your credit score dictates two sub-factors

Leasing

Leasing an automobile can appear to be a more appealing option for SSDI recipients – at least at the outset. Leases often feature lower down payment requirements, smaller monthly payments, and fewer maintenance costs because you get to drive a newer vehicle.

However, borrowers receiving disability benefits often have permanent medical conditions, meaning you have to think long-term. The problem with leasing a car is that the payments can go on for decades if you decide to continue driving. The never-ending expense takes a toll when you have a limited fixed income.

Purchasing an Auto While on SSI

The Social Security Administration allows Supplemental Security Income (SSI) recipients to own one automobile – regardless of how much it is worth – if used for transportation of the individual or another member of the household.[1]

However, SSI rules simultaneously erect formidable barriers to buying the car in the first place. A van with custom adaptations for drivers with special needs can cost $65,000 or more.

  • The $2,000 countable resource limit for money held in bank accounts prevents you from paying cash for the full sticker price
  • The average monthly benefit amount of $600 covers basic food, shelter and clothing needs with little remaining to support a monthly finance payment

So, if you cannot pay cash or take out a loan, what can you do? Fortunately, several exemptions open the door just a crack for some consumers to purchase a reliable vehicle.

Back Pay

Select consumers can use SSI back pay to buy an automobile or van. However, the amount of money this option allows you to spend in nominal. If lucky, you could afford a high-mileage clunker and pray that it does not break down and require costly repairs and replacement parts.

The SSA exempts SSI retroactive payments from the countable resources limit for up to nine months after you receive them. Keep in mind, these back payments come in three checks six months apart, which means you can hold only two of the three installments in your bank account at one time.

The math for your back pay spending power hinges on the length of time needed for SSA to make its final determination, the average monthly benefit amount of $600, and the ability to exempt two of three installments.

Wait TimeBack PaySpending Power
6 Months$3,600$2,400
12 Months$7,200$4,800
18 Months$10,800$7,200

Dealerships

Looking for car dealerships that accept SSI payments under their financing programs is not likely to prove helpful. First, the government sends checks to the person and not a business. Second, most individuals find that the $600 average monthly benefit barely covers their basic needs.

Unfortunately, the SSI parameters translate into all-cash-deals or nothing at all. Borrowing money is not a viable alternative in most cases.

Few dealerships, if any, will approve a customer for a loan with such as no money for a down payment, a high debt-to-income ratio, and perhaps an inferior credit score. Therefore, you need to dig more deeply into other workarounds, such as gifts.

Gifts

Gifts from the other abled people in your life are perhaps the best way for SSI recipients to get a car or van for themselves to drive. Others can give you the vehicle directly or indirectly.

  1. Direct car gifts do not count as income or resources, provided it is not a second vehicle.[2]
  2. Indirect awards of cash, bonds, securities, and life insurance proceeds are not counted as earnings or assets when kept in designated holding bins.
    1. Special needs trust allows the beneficiary to retain government benefits while spending donated funds for eligible uses such as transportation.
    2. Achieving a Better Life Experience Act (ABLE) accounts: permit others to bestow money, which you can then use for a Qualified Disability Expense (QDE), which includes transportation.

Footnoted SSA.gov Sources:

[1] Resource Limitations

[2] Policy for Gifts