Auto lenders require verifiable proof of income for a loan approval. Therefore, no-income-verification car loans do not exist. Since you’re financing, you are required to repay the loan and need to prove to the lender you’re able to do just that. Verifiable income is required by auto lenders, though what qualifies as verification varies depending on the income type.
Many borrowers earn income outside of traditional 9-to-5 jobs through freelance work, rental properties, or permanent disability. Proving these income sources isn’t as easy as bringing a check stub, though. Here's what to know.
What Income Documentation Do Lenders Actually Require?
With a non-W2 income source, you’re likely to need two or three years of tax returns to verify and prove your income. Bank statements don’t usually do the trick, since they don’t prove where the money is coming from or that it’s been reported and taxed.
For long-term sources of awarded income, such as permanent disability or alimony, an award letter that proves you’re going to receive that income for the entire duration of the loan is typically required.
The Co-Borrower Option
No matter which auto lender you choose, some form of verifiable income will be required. Depending on the lender, they may only accept certain types of income. If you don’t have any type of income, then your other option is to bring someone else onto the car loan application, making it a joint auto loan. Joint car loans have co-borrowers who both share equal responsibilities for the vehicle and the loan.
If you have no income, but your spouse or life partner does, they may be able to help you meet income requirements. Co-borrowers are almost always spouses or life partners, since it’s typically required that you prove you both have access to each other’s assets and income.
If you’re approved, then you both get your names on the car title, and both of your credit scores and reports are impacted by the activity on the loan.
Who Qualifies With Non-Traditional Income?
Subprime auto lenders consider your ability, stability, and willingness to pay when you apply for financing. This means taking a good look at your work and income security, residency stability, and more, as well as requiring a down payment. Down payments increase your odds of getting approved since they lower the finance amount and lower the chance of default.
Who Cannot Qualify for a Subprime Auto Loan?
Car buyers with FICO scores below 550, currently in bankruptcy, or with a total household income of less than $1,200 a month have very little chance of qualifying for a car loan through a subprime lender. Most consumers in these circumstances will either pay cash for a vehicle or finance one from a BHPH car dealer.
On the other hand, many buyers searching for what they think are "no income auto loans" who have completed a bankruptcy, have a credit score in the mid-500 range or better, and a gross monthly income of $1,800 (or more) often believe they'll never qualify for an auto loan – especially if the lender needs to review their credit report. But in the majority of cases, this isn't true.
Look at it this way: anyone who tries to entice applicants by advertising "no income" loans is only hoping to lure the most desperate car buyers. After all, how can anyone pay back a loan if they have no way to pay it off? Second, it's almost a given that this type of loan program will not reestablish someone's auto credit – something for borrowers to consider if they don't want to find themselves in the same credit situation the next time they need a car.
Finding the Right Car Dealer
Here at Auto Credit Express, we’ve created an expansive network of dealers that assist bad credit borrowers.
Through websites that support these programs, such as autocreditexpress.com, applicants can use the resources available to them. Loan calculators offer a reasonable idea of what they can afford, and videos can educate them about the subprime auto loan process.
We also make no pie-in-the-sky promises that guarantee an application will be approved. Unlike some sites that advertise "no income auto loans," the lenders our dealers work with have income and residency requirements to qualify for a car loan.
Get the ball rolling on your next car loan now by filling out our auto loan request form. We’ll get to work looking for a dealership in your area, free of charge and with no obligation.
