Auto Loans: Do You Need a Proof of Income
Some of those who are looking into auto financing agreements may be wondering whether they will need to present proof of income to get their desired vehicle. Every loan agreement is different, but there are some guidelines for which kinds of loans will require the borrower to show proof of income.
Loan Requirements for Established Lenders: What You Need for Car Loan Approval
Lenders like banks, credit unions and captive finance companies use standards to assess the risk rating for customers and decide whether to approve an auto loan. These types of lenders may ask for proof of income, as well as a credit score, bank account information or other proof of the general ability to repay a loan.
Loans That Won't Require Proof of Income
Most of the loans that don't require proof of income can be much more dangerous than those that do. A category of "high-interest" loans, such as auto pawn or auto title loans and payday loans may not ask for proof of income, but in return for lax standards, they will often add sky-high rates of interest that will trap the borrower into owing much more than they should.
Getting a Good Loan without Showing Proof of Income
If you're looking for a decent auto loan with good interest rates and don't want to show proof of insurance, your best bet is to have a great credit score above 680, along with a big down payment and ability to pay on a short term loan. A larger down payment means you will be borrowing less and investing more up front. It shows responsibility and decreases risk for the lender.
The above illustrates how proof of income standards often apply to a variety of auto loan situations.