What Can be Used as Proof of Income When Buying a Car?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - November 15, 2018

When you have bad credit and are working with a subprime lender, you can expect to be required to show proof of income. This can be done by bringing in a copy of your most recent pay stub. But, depending on the type of work you do and if you’re an independent contractor or self-employed, you could be asked to bring in other documents to help verify your income, as well.

How Can You Prove Your Income for a Car Loan?

If you have good credit, lenders aren’t going to ask for proof of income most of the time. But when your credit isn’t great, subprime lenders use you your income to help determine what you qualify for. Although the minimum income requirement varies by lender, they typically want to see you make anywhere from $1,500 to $2,000 a month before taxes. As for the documents you need to bring in, it depends on the type of work you do.

If you’re a W-2 employee and work full time, you need to bring in a computer-generated copy of a pay stub from the past 30 days that lists your year-to-date earnings. If you’re an independent contractor or 1099 employee, you need to bring in copies of your recent tax returns typically from the past two to three years. No matter your employment type, lenders prefer that you have the same job for at least six months, and may ask for a three-year work history.

Many car buyers ask if a bank statement is a valid way to provide proof of income. While bank statements show a summary of all your financial transactions over a set amount of time, you can’t use a bank statement on its own as proof of income for a subprime auto loan.

What is Verification of Income?

Another common question car buyers ask is how lenders verify your income and employment status. The verification process is actually done by the lender and doesn’t take long to complete. Lenders use an e-verify system to make sure that you’re actually an employee of the place you listed as your employer on the application. As for independent contractors and people who are self-employed, they may ask to see multiple years of tax returns to verify your employment and income status and, in some cases, you need to bring in copies of your bank statements to verify that you receive this 1099 income.

The Bottom Line

Whether or not you need to provide proof of income depends on the type of lender you’re working with. Subprime lenders always ask for proof of income, so get the documentation ready if you plan on applying for an auto loan.

At CarsDirect, we understand how difficult it is to find financing when your credit is less than perfect, and we want to help you. We work with a network of special finance dealers that stretches from coast to coast, and we want to connect you to a local dealership. Simply fill out our free and easy car loan request form and we'll get to work matching you with a dealership in your area!

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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