If you're in the market for a new or used car, one of the most important factors in financing approval is your ability to repay. Proof of income becomes essential for demonstrating this capability.

Lenders need to see a steady and reliable income source to ensure you can make consistent car payments. Knowing what documentation lenders require can improve your chances of securing financing.

Required proof of income based on employment status

Full-time employment

If employed full-time, you're in a favorable position when applying for auto financing. Lenders generally prefer applicants who have been in the same job or industry for at least six to 12 months. Two to three years of stable employment history can further strengthen your application.

What you should have with you:

• Recent pay stubs showing consistent income
• Bank statements to confirm direct deposits
• Employer information, including the company name, address, and phone number

Part-time or temporary employment

Part-time and temporary workers can still qualify for auto financing, but the approval process may be more challenging. Lenders often look for at least three to six months of consistent employment and additional proof of steady income.

What you should have with you:

• Recent pay stubs
• Bank statements showing regular deposits
• Tax returns, if applicable

Self-employment

Self-employed individuals often face stricter income verification requirements because their income can fluctuate. Lenders typically want to see at least two years of steady self-employment income, which you can demonstrate with various documents.

What you should have with you:

• Tax returns
• Schedule C (Profit or Loss from Business)
• Recent bank statements (personal and business)
• Profit and loss statements (current year)
• 1099 forms if you're an independent contractor
• Business licenses or proof of business insurance

New job or recent job change

Lenders might view your income as unstable if you've recently started a new job. Most lenders like applicants who have been at their current job for at least three to six months. However, some lenders may be more flexible if you have a strong credit history or are in the same industry.

What you should have with you:

• Recent pay stubs or a signed offer letter confirming employment
• A larger down payment to show financial stability
• A creditworthy cosigner to strengthen your application

Fixed income or unemployment

Securing auto financing while on a fixed income, like Social Security or disability benefits, can be more difficult. Lenders may hesitate because they can’t garnish these income sources.

What you should have with you:

• A Social Security Administration award letter
• Regular bank statements showing benefit deposits
• A cosigner with a stable income, if necessary

How to improve your approval chances

No matter your employment situation, you can take steps to increase your chances of getting approved for auto financing:

1. Maintain stable employment: Staying with the same employer for at least six to 12 months before applying can show lenders that your income is stable.
2. Improve your credit score: Pay off debts and make payments on time to boost your credit score.
3. Shop around: Different lenders have different criteria, so compare multiple lenders to see who has the best rates and terms.

Start gathering your documents

Proper proof of income is critical to securing auto financing, whether you're a full-time employee, working part-time, or self-employed. Lenders want to be sure you can handle monthly payments, and the documentation you provide plays a major role in their decision. To see if you’re a candidate for auto financing, start the pre-qualification process with Credit Acceptance today!