Can I Use My Husband’s Income for a Car Loan?

Getting approved for a car loan can be difficult, especially if you have little income, bad credit, or high debt. But if you’re married, you may be able to use your husband’s income to qualify for a better loan or interest rate. Here’s what you need to know about using your spouse’s income when applying for auto financing.

What is a Joint Auto Loan?

A joint auto loan is a car loan that is shared between two borrowers – usually a married couple Both spouses are listed on the loan application and the vehicle title as the owners. This is different from a cosigned loan, where the cosigner has no ownership rights to the vehicle

To apply for a joint auto loan most lenders require the co-borrower to be a spouse or legally recognized partner. Both borrowers agree to take equal responsibility for repaying the loan. If one person fails to make payments it will negatively impact both credit scores.

Benefits of Using a Spouse’s Income

Adding your husband as a joint applicant can make it easier to qualify and get better loan terms. Here are some of the biggest benefits:

• Increases available income – Lenders look at the total combined income of both spouses. If your income alone is too low to qualify, adding your husband’s income can help you meet the minimum requirement.

• Improves debt-to-income ratio – Lenders limit the amount of your total monthly debt payments compared to your gross monthly income. Including your spouse’s income can improve this ratio and help you qualify.

• Boosts credit score – If your husband has a higher credit score, it can offset your lower score when applying jointly and help you qualify for a lower interest rate.

• Makes sense for shared assets – For married couples who share money and vehicles, a joint loan simplifies things instead of having one spouse responsible.

How to Apply Using a Spouse’s Income

When applying for a joint auto loan, there are a couple steps to take:

• Inform lender you’re applying jointly – Tell the lender upfront you want to apply together with your spouse. Provide both your and your husband’s information.

• Submit joint proof of income – Supply documents to verify both incomes, like recent pay stubs, W-2s, and tax returns.

• Both spouses listed on application – Ensure you and your husband are clearly listed as the co-borrowers. Only include spouse’s income, not other household members.

• Both spouses sign loan documents – You’ll both need to sign the final loan paperwork to be legally responsible for repayment.

Potential Downsides of Joint Auto Loans

While using your husband’s income has many benefits, there are a few potential downsides to consider:

• Both spouses responsible for repayment – If your marriage ends, you can’t simply remove a spouse from the loan. Both names stay on the hook.

• Refinancing may be required – To get a spouse’s name off the loan, you’d likely need to refinance in your name only, if you qualify.

• Shared asset in divorce – The jointly owned vehicle would be a shared asset to split in a divorce. Removing a spouse’s name from the title isn’t easy.

• Spouse’s credit impacted too – Any late or missed payments will negatively impact both credit reports, not just the primary borrower’s.

Alternatives if Husband Won’t Cosign

What if your husband won’t agree to be a joint applicant? Here are some other options:

• Apply using just your income – Even if you don’t qualify for prime financing, subprime lenders may approve you. Rates will likely be higher.

• Add a different cosigner – Ask a family member or friend with good credit to cosign the loan to help you qualify and get better rates.

• Try dealership financing – Many dealers have relationships with subprime lenders and can get financing for applicants with challenged credit.

• Explore lease options – Leasing may have lower income requirements than financing, so this can improve chances of approval.

• Buy an older used car – Lenders offer more flexibility on older used cars versus newer. Consider this route if you have limited income.

• Save up a bigger down payment – The more money you put down, the more likely lenders will approve a loan and offer better rates.

Questions to Ask Before Using Spouse’s Income

While using your husband’s income can really help, it’s smart to consider a few important questions first:

• Is my marriage stable and healthy enough to make this long-term commitment?
• What’s my spouse’s take on combining incomes – are they fully on board?
• How will we handle the vehicle if we divorce down the road?
• Can I afford the payments on my own if needed?
• Is my husband’s income reliable and stable?
• Could joint ownership cause any problems with existing assets or debts?

Consulting a Financial Advisor

Since joint loans involve your finances as a couple, it can help to include a professional third party perspective. Consider scheduling a session with a financial advisor together with your spouse to review your options and decide the smartest approach. An advisor can outline the pros and cons tailored to your unique situation.

Weighing the Pros and Cons

Using your husband’s income on a joint auto loan application typically makes getting approved much easier and can save you money with better interest rates. But it also comes with responsibility for both spouses and can complicate future situations if the marriage ends. Look at your own circumstances and relationship stability to decide if the benefits outweigh the potential risks. With open communication and understanding between spouses, a joint auto loan can be a great choice for married applicants.