How To Get A Car Loan With a High Debt-To-Income Ratio

There are two ways to get a car loan with a high debt-to-income (DTI) ratio because fractions have a numerator and denominator.

Lenders use the DTI ratio to determine if you can afford a specific vehicle and set a maximum of 35% to 55%.

You can improve your DTI by lowering the numerator (cumulative monthly payments), increasing the denominator (monthly income), or both.

You can reduce your monthly debt installments by extending the term, making a down payment, improving your credit score, or choosing a cheaper vehicle.

Or, you might boost your earnings by reporting on all income sources or picking up a side gig to increase your wages.

Lower Monthly Payments for High DTI Car Loans

Improving the numerator is the first set of ways to get a car loan with a high debt-to-income ratio. In this case, lowering your cumulative monthly payments bolsters your ability to afford a new vehicle.

DTI = Monthly Debt Service/Monthly Income

Extend Term

Extending the term is the most popular way to be approved for an auto loan with a high DTI. The monthly payments will be the lowest when you have more time to repay the obligation.

Of course, your total borrowing costs will be higher when you extend the term because the interest has more time to compound. Therefore, you want to find a balance between affordability and total charges.

For instance, watch how the monthly payment and total interest charges move in opposite directions as the repayment term extends on a $30,000 car loan with a 10% interest rate.

Repayment TermMonthly PaymentTotal Interest
2 years$1,384$3,224
4 years$1,014$6,522
6 years$556$10,015

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Down Payment

Making a significant down payment is ideal for gaining approval for an auto loan with a high DTI. A sizable deposit reduces the amount financed and minimizes future delinquency associated with negative vehicle equity.

However, people living check-to-check rarely have enough money set aside in a checking account for this strategy.

Unsecured personal loans for high DTI might help you raise enough money for a significant deposit while lowering the monthly payments for your existing obligations.   

Credit Score

Maintaining an excellent credit score is a great way to get a car loan with a high DTI. Lenders are more willing to approve lower interest rates for people with the best borrowing history, resulting in lower monthly payments.

A minimum credit score of 660 is needed to buy a car without a cosigner. However, people with ratings above this threshold get better interest rates.

For instance, consider how the monthly payment for a $30,000 six-year auto loan varies by credit score, given how lenders use this underwriting tool to establish interest rates.

Credit ScoreInterest RateMonthly Payment
Best (750+)3.5%$462
Better (700-749)7.5%$518
Good (650 – 699)12.0%$586
Poor (550 – 649)17.5%$675
Bad (549-)24.0%$789

Affordable Auto

Buying a more affordable car is the least popular way to get approved for an auto loan with a high DTI because many people want a fancy ride to impress their friends, neighbors, and co-workers.

However, a slice of the humble pie goes a long way because the sticker price of the vehicle you choose drives the projected monthly payment and total interest charges.

For instance, watch how the amount financed affects the monthly payment for a six-year car loan at a 10% interest rate.

Sticker PriceMonthly PaymentTotal Interest

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Increase Income for High DTI Car Loan

Improving the denominator is the second set of ways to get a car loan with a high debt-to-income ratio. The more regular earnings you can prove, the more you lower this critical underwriting percentage.

DTI = Monthly Debt Service/Monthly Income

All Sources

Including all income sources reported to the lender is the first way to improve a high DTI and get approval for a car loan. You do not want to understate the amount of money flowing into your checking account that you can dedicate to repayment.

Avoid omitting any of these sources of regular payments made to you from another person or organization on the application.

Side Gig

Getting a side gig to boost income is another good way to improve a high DTI and score an auto loan approval. In this case, you might drive your old car to earn extra money to enhance your qualifications before applying.

Loans for independent contractors rely on regular deposits into your checking account as a proxy for income. For instance, driving for Uber, Lyft, GrubHub, Shipt, and DoorDash can augment the earnings shown on your paystubs from your primary job, boosting your ability to afford the projected monthly payments.