When you need to borrow money to buy a car, most lenders will require you to have some kind of income before you can qualify. If you are not working, but are instead on unemployment or workers' compensation, you still have a regular income. However, many lenders may be unwilling to work with you when on one of these programs.
In most cases, unemployment benefits will not be enough to get you qualified for a car loan. With unemployment benefits, you can only receive money from the program for a few weeks or months. For example, you may only be able to get benefits for a maximum of 26 weeks. Since the auto loan will last for several years, most lenders will not be willing to use this as an acceptable form of income for the loan.
Workers' compensation is another type of financial benefit that you could receive if you are injured while on the job. When you receive workers' compensation, you may receive money for medical bills, therapy, lost wages and pain and suffering. If the injury you have is keeping you out of work, but you still have a job, the lender may be willing to count your regular income toward the loan. This is common for those who only have temporary injuries and will be back to work soon.
Out of Work
If you are receiving workers' compensation but you are not still employed with your employer, you may not be able to qualify for a loan. In this case, the workers' compensation benefits will eventually end. At that point, you will no longer have any income coming in, but the car payments would remain. Because of this, the lender will usually look at whether you can go back to work after you heal. It may also take into consideration the severity of your injury and the expected rehab time.
If you do find a lender that is willing to allow you to count either one of the sources of income toward your loan, you will not be able to qualify unless you have a solid credit score. Your credit score tells the auto lender what type of borrower you have been previously. Without a good credit score, you most likely will not be approved for an auto loan while on unemployment or workers' compensation.