If you’re someone with bad credit or no credit who is looking to purchase a vehicle, you will almost certainly need to provide proof of income to get approved for financing during the car-buying process. Why? Because banks and auto lenders want to verify that you are able to cover your monthly car payments. Below we’ve outlined the proper income documentation to provide based on employment status.
Buying a Car as a W-2 Employee
If you’ve listed a place of employment on your credit approval application, you’ll likely need to provide pay stubs from your weekly, bi-weekly, semi-monthly or monthly paychecks as proof of income. You may also provide copies of your bank statement. Employer information to provide includes the employer name, physical address, phone number and hire date.
Buying a Car while Self-Employed
While being self-employed with bad credit or no credit can make getting approved for financing a little more difficult, submitting the proper documentation to subprime finance companies to verify your income can help improve your chances of getting credit approval. Since self-employed workers don’t receive a W-2 form for tax purposes, be prepared to provide copies of your tax returns or a 1099 if you work as an independent contractor. You may also provide copies of your bank statement. Additional information to provide includes the name of the business or occupation, as well as the business city and state.
Buying a Car with a New Job or Temporary Employment
Although most subprime finance companies may require you to have been at your current employer for at least six months, being new to your job or temporarily employed doesn’t necessarily disqualify you from being approved for financing with bad credit or no credit. If you have a steady, verifiable income, even if it’s from a supplemental source, you can still be considered for credit approval. In fact, Credit Acceptance’s subprime auto finance program has no minimum job time requirement to qualify for credit approval, and even enables dealers to approve credit-challenged car buyers with temporary employment. Additional information to provide for temporary or contract employees includes the placement agency name, address, phone number, and hire date, as well as the name, address and phone number where you currently report to work.
Buying a Car on a Fixed Income
If you only have a fixed income such as social security, qualifying for vehicle financing can be difficult because your wages aren’t able to be garnished, meaning they are unable to be used for debts such as unpaid taxes, fines, car loans, etc. However, you may be able to provide your award letter from social security as proof of income. If that still doesn’t help you qualify, you may want to consider getting a cosigner.
Credit Acceptance is a subprime auto finance company that works with more than 12,000 participating car dealers across the U.S. to help car buyers with bad credit or no credit get approved for vehicle financing. If you are currently in the market to purchase a vehicle and need approval, fill out the form on our website to start your credit approval today!
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