Even if you make a lot of money, getting paid in cash can make financing a vehicle difficult if you have poor credit. Here at Auto Credit Express, a consumer recently asked us this question:
"Hi, I am looking to finance a car but I don't have an over the table job. I clean houses for a living. However, I just wrecked my car and am looking to buy another. I would put down a very large down payment, at least four or five thousand cash."
Bad Credit and Unrecorded Income
First of all, we're going to assume that this person probably has bad credit. We say this because if they had good credit, they wouldn't have a problem financing a new car – especially with a four or five thousand dollar down payment.
But it's problematic if they have poor credit because all subprime lenders require proof of income and, unfortunately, bank deposit records aren't considered to be an adequate proof of income.
Car Loans for Under the Table Workers
Since this person gets paid "under the table”, we're also going to assume that they don't receive a W-2 wage and tax statement from the people whose houses they're cleaning.
This means that with no W-2 to prove this income, the only other proof that's typically acceptable to subprime lenders is one to three years of professionally prepared income tax returns. These must show a net income (after expenses) that meets both a lender's minimum income requirements as well as a favorable debt to income ratio (monthly bills, plus a car payment and car insurance, can't exceed 50% of a borrower's income).
Chances are, this person doesn't show all (or possibly any) of their income on a tax return, so getting a loan from a subprime lender is probably not in the cards.
There are, however, other car buying possibilities consumers who get paid in cash under the table can explore:
- Check out a buy here pay here car lot – Financing a vehicle through one of the larger, national BHPH car lots (one that reports loans and timely payments to the credit bureaus) is a viable option, especially with that kind of a down payment
- Pay cash for a vehicle – With used car prices trending lower, $4,000 to $5,000 should get you a decent used compact or subcompact car.
In either case, consumers need to do their homework. This means checking sites such as Kelley Blue Book and NADAguides to be sure they're paying a fair price.
The Bottom Line
Unless they report all of their income, credit-challenged consumers who get paid in cash under the table will find it very difficult to get approved by a subprime lender. But there are acceptable alternatives including paying cash or getting financed with a BHPH dealer that reports to the credit bureaus.
If you need a vehicle, begin the process by completing our online auto loan request form. Auto Credit Express will work to match you with a dealership near you that specializes in getting people in unique situations financed.