Can You Buy a Car While on Disability Benefits?

Purchasing a car while receiving disability benefits requires careful consideration of financial implications and regulations. This guide outlines strategies and resources for vehicle ownership for those on disability, focusing on how such a purchase impacts eligibility and financial stability.

Understanding How Vehicle Ownership Affects Disability Benefits

The impact of vehicle ownership on disability benefits depends on the type of benefits received from the Social Security Administration (SSA). Social Security Disability Insurance (SSDI) is not a needs-based program, meaning there are no asset limits that affect eligibility. Individuals receiving SSDI can own multiple vehicles, regardless of their value, and are not required to report car ownership to the SSA.

Supplemental Security Income (SSI), conversely, is a needs-based program with strict asset limits. For SSI eligibility, an individual’s countable resources cannot exceed $2,000, while a couple’s limit is $3,000. However, the SSA makes an exclusion for one vehicle, regardless of its monetary value, if it is used for transportation for the individual or a member of their household. This means one primary vehicle does not count against SSI asset limits, regardless of value, as long as it is used for essential purposes like personal transportation or medical appointments.

Should an SSI recipient own more than one vehicle, the value of the second car counts toward the asset limit. The SSA applies the vehicle exclusion to the car with the greatest equity value if multiple vehicles are used for transportation. For instance, if you own two cars, the more valuable one would be excluded, while the equity of the less valuable one would be counted as a resource. This could push an individual over the asset limit, affecting SSI eligibility.

SSI recipients must report the acquisition of a new vehicle to the Social Security Administration. This reporting should occur within 10 days of the purchase. Failure to report changes in resources, such as vehicle ownership, can lead to issues including overpayments or temporary suspension of benefits.

Purchasing a car is not considered income for SSI purposes. However, if funds used for the purchase cause assets to exceed the limit, or if large financial gifts are received for a car, it could impact benefits. Using specialized accounts like an ABLE account or a Special Needs Trust (SNT) can help save funds for a vehicle without jeopardizing SSI eligibility.

Financial Strategies for Purchasing a Vehicle

Individuals on disability benefits have avenues for financing a vehicle, including traditional options like auto loans from banks, credit unions, and dealerships. Lenders evaluate an applicant’s credit score and income stability when considering loan applications. While Social Security Disability Insurance (SSDI) payments are accepted as stable income, recipients may need to provide additional documentation.

For those receiving Supplemental Security Income (SSI), obtaining traditional financing can be challenging due to the program’s asset limits and the fact that SSI benefits cannot be garnished. Some lenders may consider SSI as income, but they might require a higher down payment. A co-signer with a good credit history can improve the chances of loan approval, though both the recipient and co-signer would be responsible for the loan and it would appear on both credit reports.

Beyond the purchase price, budgeting is crucial for the total cost of car ownership. This includes ongoing expenses such as insurance premiums, maintenance and repairs, fuel, registration fees, and taxes. The average monthly cost of car ownership can range from $940 to $1,000+, depending on factors like vehicle type, usage, and location. Understanding these costs ensures the vehicle remains affordable, preventing financial strain.

Programs and Resources for Accessible Transportation

Programs and resources assist individuals with disabilities in acquiring or modifying vehicles to meet their specific transportation needs. State Vocational Rehabilitation (VR) services are a resource, as they may provide funding for vehicle purchases or modifications if the transportation is necessary for employment or to maintain independence. These services aim to help individuals with disabilities prepare for, obtain, and retain employment.

Car manufacturers offer mobility rebate programs designed to offset the cost of installing adaptive equipment in new vehicles. These rebates can range from $500 to $1,500 and apply to modifications such as hand controls, wheelchair lifts, ramps, and specialized seating. Manufacturers like Ford, General Motors, Chrysler, Honda, Toyota, and Volkswagen participate in these programs, which require the adaptive equipment to be installed within a certain period after the vehicle purchase.

Non-profit organizations and charities also play a role by offering grants and financial aid for accessible vehicle purchases or modifications. Some organizations focus on particular medical conditions, such as those supporting individuals with cerebral palsy, muscular dystrophy, multiple sclerosis, or spinal cord injuries. Examples include the Multiple Sclerosis Foundation’s Brighter Tomorrow Grant, which offers up to $1,000, or the National Organization for Vehicle Accessibility, which provides up to $5,000 towards costs. These grants can bridge funding gaps, making accessible transportation more attainable. Additionally, some financial institutions offer specialized “Access loans” tailored for individuals purchasing accessible vehicles, providing flexible financing terms.