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How to Finance a Car with No Proof of Income?

Proof of income is an integral part of any loan approval process, as the lender must ensure that you, the borrower, has sufficient income to repay the borrowed funds. If lenders did not verify each consumer’s income, it would be possible for the average American to finance a $100,000 Mercedes or Maserati, whether they could afford to do so or not–obviously, this would cause big problems for both lenders and borrowers.

Is it Possible? Yes!

As proof of income, most lenders prefer to see 1-2 past pay stubs. But what do you do if your employer doesn’t provide pay stubs, or you’re self-employed or own your own business? Tip income can be another issue, as it doesn’t typically show up on your pay stubs. Fortunately, though it can be difficult to finance a car if you cannot prove your income, it’s possible. Here are a few things that you will need.

  • Valid driver’s license
  • Social security card
  • Car insurance
  • Bank statements…at least a checking account, but preferably checking and savings
  • Co-signer

You can see why you will need a valid driver’s license, social security card, and car insurance. The bank statements are to prove that you do have some type of consistent income. Freelancers and contractors often are paid directly, so do not have traditional paystubs to show a lender, but have bank statements. Many lenders may require a co-signer for your first loan because of the risk involved. Lenders want every assurance that they will be paid on time and a co-signer provides that.

In addition to the list above, you may be required to offer a higher down payment. You may be asked to provide anywhere between twenty and fifty percent of the total purchase price of the car you want. This goes back to how risk adverse lenders are. Through long years of experience, lenders have found that people who put larger down payments on vehicles are more apt to make their payments on time.

Even with everything listed here, you may still be denied by major lenders and all of the credit unions in your area. Do not give up. There are specialty lenders online that are more than willing to work with individuals that are unable to provide proof of income.

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  1. […] Every lender has a set of guidelines that determine whether a borrower is qualified for a car loan. One of the biggest aspects of a loan approval is your income. Lenders require that you have a minimum gross monthly income of $1,450 and that income must be verifiable. The verification process differs from lender to lender, but normally includes a copy of a recent paystub or tax documents. It can be pretty tough to finance a car without proof of income. […]