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Can You Get a Car Loan if You Work “Under the Table”?

Getting paid under the table is a great way to avoid paying taxes, but makes it very difficult to get any sort of credit. Even payday lenders want to see proof of income. With that having been said, there is one scenario that may help you get a car loan while working under the table.

Why it is so Difficult

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.

Why? Because lenders operate with a “proof or it didn’t happen” mentality. You may make enough to meet the lender’s guidelines, but they won’t simply take your word for it. Without one of the above documents showing enough income, you could be in for a rocky road. Fortunately there are some workarounds.

Using a 1099 to Get a Car Loan

Most people who work under the table would fall into the broad occupational category of ”contractor.” The simplest way to get a car loan is to have an accountant create a 1099 or a Schedule C, then pay taxes on the income that you declare on those forms. Of course, this means you lose the tax benefits of being paid in cash.

Even after you are able to procure one of these forms, you may have trouble getting a car loan with just a single year’s income as a contractor. Large lenders often want to see that you have had stable income for two to three years before they offer you a loan. Credit unions may even balk with just one year’s tax form; however, you may still be able to get a car loan through a specialty lender.

Specialty lenders have looser lending guidelines than banks and credit unions. Even with looser guidelines, these lenders are going to want some sort of proof of income. Often, they look at your current situation instead of the past. These loans are reported to the major credit reporting agencies, but they do come with a higher interest rate than you may expect. Additionally, you may be required to repay the loan over a comparatively short time. Despite these issues, a specialty lender may be the best option for you to get the car loan that you need.

How We Can Help

We work with many lenders, dealer, and finance specialist across the nation who regularly finance people who work as contractors, freelancers, or in the service industry, earning a large portion of their incomes “under the table.” Go here to apply online and get matched with a company willing to fund your loan. They can help you determine the right documentation you need for approval, and help you get behind the wheel without so much hassle.