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How child support could affect your car loan

Whether you are paying or receiving child support, those payments could affect many other areas of your financial life for as long as you, on behalf of your child or children, pay or receive them. One example is if you are attempting to take out an auto loan and purchase a car.

Normally, lenders don't consider child support too seriously, as those payments are generally treated differently than other financial obligations. But if you have a bad credit score, your child support payment schedule and history will probably affect your chances of being granted the loan.

If you are the child support payor and you have gotten behind in your payments, lenders may refuse to give you a car loan. This, lenders say, is because parents who are avoiding making child support payments tend to change jobs often in order to keep their paychecks from being garnished to cover missed payments. In addition, any court judgment for child support delinquency will show up on a credit report.

However, if you can show that you have made arrangements to repay the amounts owed, a lender may approve your loan application.

Child support may also affect those who receive it. If you have a bad credit score and child support is your only income, lenders may hesitate to give you a loan. This is because, if you fall behind on your car loan, child support payments can't be garnished in order to satisfy your debt.

But if you can show that you have another form of steady income or that your poor credit score is not habitual but is the result of a single event, such as a medical issue, lenders may be more apt to offer you a loan.

Source: Auto Credit Express, "Child Support and Bad Credit," Steve Cypher, Sept. 24, 2012

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