When you apply for a car loan to finance a new vehicle, most lenders will ask for proof of your income. If you’re unable to provide this verification, you still have options for getting a loan. Review this guide to learn how to get a car loan with no proof of income through car dealerships and other lenders, along with tips to help you secure this financing.
No Proof of Income: Car Dealership Loans
Many people choose to get a loan to finance a new vehicle, rather than paying the full amount outright. When you apply for a car loan, many lenders will ask for proof of income to ensure you can make regular payments toward the vehicle and interest on the loan. If you’re self-employed, work on a temporary basis, or have income from sources other than paid employment, it may be difficult to provide this proof of income. In this situation, it’s often easier to get a loan through a local buy here, pay here (BHPH) dealership.
BHPH dealerships sell vehicles and provide car loans at the same location. As local dealers, these businesses may be more likely to waive income verification requirements if you meet other criteria, such as having a good credit score. When you finance your vehicle this way, you make loan payments directly to the dealership, rather than a bank or other financial institution.
These dealerships offer many benefits for loan applicants without income verification. According to Experian, a credit reporting agency, these dealerships specialize in working with borrowers who can’t get approved through traditional lenders. Some advantages of getting a loan through a BHPH dealership include:
- Lower standards. These dealers often have lower approval standards than traditional lenders. They can help applicants with bad credit or limited income get vehicle financing.
- Streamlined process. At a BHPH dealership, you can purchase and finance a vehicle at the same place. This streamlined process differs from the experience you may have at a traditional dealership, which may take time to complete, especially if you can’t provide proof of income.
While a car dealership loan may be a good option if you can’t provide proof of income, this type of financing often comes with higher interest rates and fees. You may get a shorter repayment term, and penalties for failing to make a monthly payment may be more severe. Before you finalize the loan, make sure you understand the terms and can meet your monthly payment obligation.
No Proof of Income: Bank Loans
While it may be harder to get a car loan through a bank or financial institution without income verification, it’s not impossible. Most banks will ask for your proof of income, but how you can satisfy this requirement will vary based on the lender. If you don’t have proof of income, some lenders will approve your car loan if you use one of these methods:
Some lenders will allow another person to cosign on your car loan. By cosigning your loan, that person agrees to take financial responsibility for paying back the loan. Often, banks will offer this option if a cosigner meets their income and credit requirements. If you’re worried about providing proof of income, ask a family member if they’d be willing to cosign the car loan. When you ask, explain to your cosigner how you plan to make payments. Make sure they understand their responsibilities in cosigning for the loan.
Typically, banks consider income and credit when determining whether to approve a car loan. If you’re unable to prove your income, it’s possible you can waive this requirement if you have high credit. Banks view someone with a high credit score to be more likely to make regular payments, which means they have less risk. Before you apply for a car loan, check your credit score to make sure it’s accurate. If you want to improve your score, try these tips:
- Pay down credit debt. Start making payments on your credit cards or loans to pay down your credit debt.
- Get a credit card. If you have no credit history, you can get a credit card and make on-time payments to build your score.
- Ask for help. If you have a friend or family member with excellent credit, ask if they can add you to their credit card account.
Every bank has its own income requirements for approving car loans. Some lenders may only consider applicants who have employment income, while others will consider various other income types. Other types of income may include retirement or pension accounts, disability or Social Security, investment returns, or rental properties. If you have non-employment income, check with lenders to see if they will accept it when you apply for a car loan.
Other Ways To Get a Car Loan With No Proof of Income
If you’re still having trouble getting approved, try these tips to get a car loan with no proof of income through car dealerships or other lenders:
Prove You Can Pay
Without proof of income, dealerships and lenders will worry about your ability to make loan payments. Prove you can pay by providing other forms of verification, such as tax stubs or bank statements. These documents may help you meet income requirements without having to provide employment records or pay stubs.
Save for a Down Payment
Some lenders may approve you for a car loan without income verification if you can provide a large down payment. Before you buy a vehicle, save for a down payment in cash. Aim to put 10% to 20% down on a new vehicle, which helps minimize the risk to lenders and reduces the amount you need to finance.
In some cases, lenders may allow you to use collateral for your loan. If you don’t repay the loan, the lender can seize this collateral as repayment. Some assets you may use as collateral include:
- Car titles
- Cash accounts
- Property deeds
While it’s challenging to get a car loan with no proof of income, car dealerships and other lenders may have options available to you. Consider purchasing and financing a vehicle from a buy here, pay here dealership to have a greater chance of qualifying for a loan. Besides these dealerships, you can use other methods to get approved for a loan so you can finance your new car.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.