Providing Proof of Income for a Car Loan

If you’re considering purchasing a car through a dealership, arrive at your appointment with the paperwork you may need to apply for financing. Proof of income is one of the main types of documentation necessary for your application. It shows that you make enough money to afford the loan amount you’re applying for. 

Banks and other financial institutions don’t want to lend you money they don’t think you can repay. By reviewing your income and your financial situation as a whole, they can determine whether lending you the money makes sense.

Your dealer may recommend a more affordable option if you don’t make enough to afford your loan payment reliably. While this isn’t the end of the world, if you have your heart set on a certain vehicle, you’ll want to gather as much documentation as possible to verify your income.

Do All Car Loans Require Proof of Income? 

Most car loans do require proof of income. However, if you have an excellent credit score or can provide a large down payment on the vehicle, you may be able to find some loan options that don’t require income verification.

Still, providing proof of income can make your loan process more seamless. With this documentation, the lender can grant your loan faster. 

Thankfully, you can be flexible with the type of income verification you provide. Before heading to the dealership, take a few moments to collect at least one income verification document to provide with your loan application. 

What Can You Use as Proof of Income? 

Some financing institutions have specifications about the types of income verification they accept. Generally, you can provide any of the following as proof of income for a car loan:

• Pay stubs: Verified pay stubs from your employer show your income over a specific period. Some lenders may require multiple paystubs from the past two or three months. 
• Income tax documents: These documents show how much money you made in the previous tax year. If you’re an independent contractor, you can often use income tax documents to prove your income instead of pay stubs. 
• Bank statements: These statements show the money entering and leaving your bank account over a specified time. They can prove other forms of income, such as rental or freelance income. 
• Employment letter: A letter from your employer detailing your employment history with the organization can support your application, but most dealers won’t accept it as your sole income verification. 

What If You Can’t Prove Your Income? 

If you can’t prove your income through any of the above means, your eligibility for an auto loan may decrease. Some lenders may still approve your loan after reviewing your credit history, especially if you can provide a co-signer. Still, not providing income verification could affect your loan terms, such as your auto loan rates and monthly payments.

Talk with your dealer about whether any other type of income verification could support your application. They may be willing to work with you if you have an unconventional job or can’t prove your income through traditional means. 

Need Help Qualifying for Financing? Contact 1803 Capital

If you’re having trouble coming up with proof of income for a car loan, 1803 Capital, may be able to help. Contact us today to learn more about our auto financing options.