How Can I Get an Auto Loan When Most of My Income is Cash and Tips?

Q: I wanted to know how would you go about getting a car if your credit is not bad but not great and if your income in not documented. You have plenty of money but it’s from tips. What determines your down payment? Could you go to the lot and put about $600 down or is that not possible?

Latisha – Fort Worth, Texas

A: All dealers are trained to work with whatever amount of down payment the customer has. The higher the percent of down payment, the better chances of getting the bank (or lender) to get interested in your deal. There are many car lots that carry their own financing. Just be prepared to pay more for the same vehicle compared to dealers that outsource their financing. Many of these independent car lots do not report to the credit bureaus, meaning that you may not establish a public credit rating for paying off this type of loan. 

This circumstance can definitely be a tough scenario; however, your bank statements showing consistent deposits in a timely, routine manner could be very helpful in this situation to prove your income. It’s important to know that all lenders want documentation that proves repayment capabilities of their loan to you. There are many jobs where 1099 forms, certified profit and loss statements, notarized tax returns and bank statements are necessary to fulfill the lender’s requirements of proof of income. Secondly, buying a vehicle that will satisfy your needs and not necessarily your wants or desires can prove to be the most sensible thing to do. The vehicle transaction should show a good down payment, besides paying for the sales tax and registration fees. Remember in this circumstance obtaining financing is the highest priority, but take all necessary steps toward buying a safe and reliable vehicle. Be open to all great vehicles even though you may think that they don’t fit your image.

Agustin Vasquez, Jr. – General Manager, Mack Massey Chrysler Jeep Dodge, El Paso, Texas