What Can Be Used as Proof of Income for a Car Loan

What Can Be Used as Proof of Income for a Car Loan

April 4, 2019    Car Loans

No matter how you make your money, documents of proof of income for a car loan can help you get approved. This is especially true for those with a low credit score.


In this post, we cover:


Why do you need proof of income?

It’s a standard practice for a lender to ask for proof of income and employment information when a customer with bad credit applies for a car loan. This is because they want to make sure you can afford the purchase and won’t default on your monthly car payments.

A low credit score can be a red flag for some lenders, but if you have a steady income your car loan application has a better chance of getting approved.


The minimum monthly income requirement varies by lender, but generally falls between $1,500 and $2,000 before taxes for a car loan.


What are auto loan requirements for income verification?

So, now that you know why you need to verify your income you’re probably wondering how to do that. If you’re employed in a traditional 9-5 job there are some pretty straightforward options. If you come by your paycheque in a less traditional way you might have to do some extra legwork to prove your income.


Different income streams require different documents:


  • Salaried or part-time employees

A pay-stub from the last 30 days that includes your year-to-date earnings will usually do the trick if you are a full-time salaried employee. A pay-stub will also suffice if you’re employed part-time, but make sure you bring in stubs from each workplace if you have more than one part-time job.



  • Self-employed

Contractors, freelancers and other self-employed folks don’t get a bi-weekly pay-stub for the work they do. If you fall into this category, you’ll need to bring in copies of your recent tax return as proof of income. You can also get a proof of income statement directly from the Canada Revenue Agency through your online CRA account.



  • Seasonal workers

If your job only lasts part of the year, as is the case for construction workers and farmers, employment insurance will make up the bulk of your income. Tax returns from the last two years will usually be enough to verify income and employment.



  • Fixed income

If you receive any form of government assistance and are living on a fixed income you’ll need to bring in all the relevant documents that show your monthly benefits. Be aware that your income might not be high enough to qualify you for a bad credit car loan. If this is the case, getting a co-signer with good credit can go a long way in strengthening your loan application.


It doesn’t hurt to get creative when thinking about what documents to use as proof of income — the more income you can show the higher your chances of getting approved. You might also be able to qualify for a larger car loan.


What employment information will I need to share?

Be prepared to share some information about your employment history on your car loan application. Your lender might need the contact information for your current employer to confirm that you work where you say you work, or they may ask for a detailed work history from the last few years.

All of these pieces help them make a decision on your loan application.


Don’t be afraid to ask

If you’re still not sure what to use as proof of income just ask the dealership or financial institution you’re working with. Different lenders might have different income and employment verification requirements. Having the right documents will streamline the approval process and get you into a new vehicle faster.


Proof of income is a requirement for most bad credit car loans

If you have a low credit score you’ll need to provide proof of income and employment before a lender will approve you for a car loan. This is to make sure that you can afford the monthly payments on the loan. Proof of income documents vary by employment type and can include recent pay-stubs, tax returns or financial assistance paperwork.

Asking for employment history and employer contact information is also standard practice.



At Birchwood Credit Solutions, we require a minimum income of at least $1,500 to qualify for a car loan. Fill out an application here or give us a call today to find out what kind of proof of income documents we look for during our hassle-free application process.