If you fudge the amount of money you make or anything else to do with your employment on an auto loan application it could mean trouble. Car Loans are binding documents, so it's always a good idea to be honest when you need financing.
Lying on an Auto Loan Application
Lying on an auto loan application is considered fraudulent, so it’s not a good idea at all. There are three main possible outcomes if you do so:
- Denial – The lender figures it out and denies you auto financing, which is likely since lenders almost always verify employment and income with documents.
- Future trouble – If you somehow manage to get approved for a loan that doesn’t match your actual income or employment situation, it could spell default in the future if it exceeds your real budget.
- False pretense – The biggest risk you pose by lying on a loan application is being charged for false pretense, and if you’re convicted, it could mean jail time if the lender pursues it.
Best case scenario, you’re denied financing; worst case, you’re charged for lying.
And, if you do manage to sneak by and get approved and you take on a car loan that’s too much for your income to handle, it could mean default and repossession. these outcomes can cause major damage to your credit reports and score and can make it difficult to get approved for a car loan in the future – even if you apply with bad credit auto lenders.
How Lenders Can See the Truth
Lenders – bad credit and traditional – almost always verify employment and income before they approve borrowers for car loans. This is typically done by requiring you to provide either computer-generated check stubs or two to three years of tax returns. Most auto lenders look at your monthly gross income which is your income before taxes.
Additionally, lenders that assist borrowers with credit issues (subprime lenders) typically look at your work history, too. Since borrowers with credit challenges could potentially pose more of a risk, they tend to look at your income and employment with a fine-toothed comb to see if your situation is stable enough to handle the auto loan.
Most subprime lenders require a consistent work history of three years, and require that you’ve been with your current employer for around one year. An auto lender may even require you to bring an employment verification form completed by your current employer, which usually lists your date of hire and your current employment status.
Be Honest About Your Income
If you’re thinking about lying on an auto loan application, we don’t recommend going through with it. Lenders ask about your income and employment history because they’re making sure that you can handle the loan amount you’re applying for.
Believe it or not, lenders want to see their borrowers succeed in vehicle financing. When you take on new credit you can comfortably handle it means less stress for the lender, too.
By being honest about how much money you bring in each month, the lender can more easily determine what you can realistically afford. If you’re looking to take on a car loan that may stretch your budget to the max, consider a down payment.
Down payments lower the amount you need to finance, lower your car payment, and may expand your vehicle options. As a bonus, down payments can increase your approval odds because you have skin the game. Cash down tells a lender that you’re willing to invest in your own success, and borrowers that have down payments have a higher auto loan success rate.
Shop Within Your Budget and Credit Score
Generally, bad credit auto lenders require that their borrowers have a minimum monthly gross income of around $1,500 to $2,500. This income requirement typically must be met with a single source. And if your income is falling short of this common cutoff, having a co-borrower add their income to yours may be the solution.
Or, if you need a job or extra cash, check out our resource page to see what our partners can offer you.
If a lower credit score is the real problem getting in the way of the car loan you need, then we want to help. At Auto Credit Express, we’ve created a nationwide network of dealerships that are signed up with subprime lenders. These lenders specialize in assisting borrowers with credit challenges, and we want to connect you to a dealer that’s signed up with them.
Fill out our free auto loan request form and we’ll get right to work looking for a dealership in your local area with bad credit lending resources.