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Acceptable Proof of Income for Car Loans

Acceptable Proof of Income for Car Loans

 

Proof of income is an essential part of any auto loan application. It is designed to back up your claim of having sufficient income to afford repayments and plays a pivotal part in deciding whether you’re accepted or not. But what exactly can you use as proof of income for car loans? Our auto loans team explains what you can use to support your application.

 

Proof of Income for Car Loans

 

It’s nothing personal when you’re asked to prove everything. The lender doesn’t know you. They have (probably) never met you and know nothing about you except what’s on the application and on your credit report.

 

Yet they are considering lending you a large sum of money, so they need to make sure they will get that money back. Hence all the verification.

 

So, what can you use to prove income?

 

Proof of income for employees

 

If you’re an employee, that’s easy. You can use a pay stub, salary statement or whatever form, letter or printout you get each fortnight or month with your pay.

 

All employers are obliged to provide a written report of your pay on official paperwork outlining your pay, any deductions and any other changes to your standard pay. This is what you can use.

 

If your employer doesn’t use branded paper or less official pay stubs, you can supplement these with your bank statements showing your pay hitting your bank account.

 

If you have more than one job that you’re using on an application, you would need paperwork for each job.

 

Seasonal workers

 

Seasonal workers can also use pay stubs or salary statements but may also be asked for 2 or more years tax return to show how much and how regularly you get paid. This is to ensure you earn enough throughout the year to afford the loan.

 

The same guidance applies if you have more than one seasonal job. You’ll need paperwork for each individual job you use on your auto loan application.

 

Self-employed or contractors

 

Self-employed workers or contractors will need to use whatever paperwork is generated to show income. That’s usually tax returns but can also be formal contracts for ongoing work, bank statements showing your income as a freelancer or any contractors or pay receipts you may generate.

 

You can get your tax return from the CRA to use in an auto loan application.

 

We generally recommend adding bank statements to any auto loan application if you’re self-employed. It’s always better to offer too much evidence rather than not enough and not all lenders are as comfortable working with non-standard employment than others.

 

Other Proofs of Income for Car Loans

 

If you have income from investments, rents, social security or disability, you can use the official paperwork, annual income statements, your tax returns or whatever official paperwork is generated by whoever manages the income.

 

If you manage your own income, you’ll need to use bank statements and tax returns to demonstrate there is enough to pay for the loan.

 

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Categories: Auto Loan

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