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, an applicant 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 4 or 5 thousand cash."
Getting Financed if you're Paid in 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 are not 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 he/she does not receive a W-2 wage and tax statement from the people whose houses they are cleaning. This means that with no W-2 to prove this income, the only other proof that's acceptable to subprime lenders is, typically, 1-3 years of professionally prepared income tax returns that 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 percent 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.

Other Possibilities

There are, however, other possibilities that this person can explore:

  1. 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 payments to the credit bureaus) is a viable option – especially with that kind of a down payment
  2. Pay cash for a vehicle – With used car prices trending lower, $4,000-$5,000 should get you a decent used compact or subcompact car.

In either case, they need to do their homework. This means checking sites such as Kelley Blue Book's kbb.com and nada.com 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 under the table will find it very difficult getting approved by a subprime lender. But there are acceptable alternatives including paying cash as well as getting financed with a BHPH dealer that reports to the credit bureaus.

If you need a vehicle, begin the process by completing our online application. We will match you with a dealership that will give you the best shot at improving your situation.