Results 1 to 7 of 7

Thread: Can I get approved for a car loan?

  1. #1
    Member
    Joined
    Nov 2010
    Posts
    26
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default Can I get approved for a car loan?

    My car died & I need a new one ASAP. I have about 1500 saved up right now. Every dealership wants proof of income which I don't have, but for the last six months I have been making regular deposits in my checking account, an average of about $5-600/week. So far my plan is to tell them that I babysit/do hair/bartend or something along those lines where I'd be getting paid cash & show them my bank statements. Has anyone been in this situation and/or know if a dealership would accept this as proof of income & finance me? I'm looking in the $10,000 range, my credit is below average but not terrible (don't know the exact score) and I don't have a cosigner. Also, I plan to have about $3000 to put down. Any input is greatly appreciated!!!

  2. #2
    Banned
    Joined
    Aug 2011
    Location
    Aboard The Spaceship
    Posts
    4,787
    Thanks
    3,183
    Thanked 10,142 Times in 3,290 Posts
    My Mood
    Breezy

    Default Re: Can I get approved for a car loan?

    Its going to be reeeeeally hard to get a car loan unless you have years of stellar credit or a co-signer, while being self-employed. I would suggest searching "bad credit" on craigslist (in cars/trucks) & hope you get lucky or buying something upfront in cash.

  3. #3
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Can I get approved for a car loan?

    As a result of the subprime mortgage debacle, the US established new regulations that lenders must now abide by. One of these regulations is official 'proof of income'. Where straight job employers are concerned, official 'proof of income' for an employee can be established via paycheck stubs ... based on the assumption that the same amount of money will be paid every week / 2 weeks etc. as long as that person is employed.

    However, where self-employed persons are concerned, establishing 'proof of income' gets more complicated. The primary problem experienced during the subprime mortgage debacle was that self-employed persons were able to 'state' that they had a certain income level, but weren't required to actually prove that income existed. So under the new regulations, there is now only one absolutely ironclad way for a self-employed person to provide official 'proof of income' to a lender - by showing that lender past years' tax returns. From an official standpoint, money reported as income on a tax return really IS income, and money not reported as income on a tax return doesn't officially exist, pure and simple.

    Self-employed persons can attempt to provide bank account transaction records to lenders. However, as was discovered during the subprime mortgage debacle, just because a person was able to come up with the cash to make seemingly regular bank deposits for a comparatively short period of time, there is no official proof that the money deposited into the bank account actually came from an income source ... versus coming from another 'loan' from a non-bank source, or from a 'one-time' financial activity like a lottery / gambling win or inheritance, or from the liquidation of an asset. etc. Whether or not such bank account transaction records will suffice as proof of income for a particular lender is, to some degree, a matter of lender policy. Putting $3000 down on a $10,000 second-hand vehicle would also provide a reasonable amount of 'positive equity' for the lender, improving chances for approval.

    However, I would also point out that when your new vehicle is registered, the state motor vehicle agency will make an automatic report to the IRS and your state income tax agency that person name X address Y social security number Z just put down a $3000 deposit and agreed to pay perhaps $ 300 a month in auto loan payments. IRS and state computers will then attempt to match up a previously filed tax return ... or at the very least expect a newly filed tax return for 2012 income by April of 2013 ... that shows enough reported income to explain how the auto purchase was economically possible. Granted that purchasing a $40,000 vehicle will draw a lot more attention than purchasing a $10,000 vehicle, but an automatic computer cross-check will take place nonetheless. Obviously, if you are withholding your own estimated tax money prior to making those $~500 weekly bank deposits, and are / will be making quarterly estimated tax payments and filing a 2012 tax return, then this won't be a problem. However, if you have 'forgotten' to do so, thus the IRS and your state tax agency's computers can't find a tax return with a significant amount of reported income, once they check your bank account transaction records showing 52 * $500 or $26,000 worth of money deposited during the course of 2012, you may wind up with a 'knock at the door'.

    Purely for information purposes, unless your state has a lower reporting limit in effect, the only way to avoid the above automatic reporting and subsequent automatic cross-checking is to purchase the vehicle with 100% cash ... and also with the total purchase price including tax and fees being less than $10,000 ( to avoid the triggering of an IRS cash transaction report by the car dealer ).
    Last edited by Melonie; 06-10-2012 at 05:03 AM.

  4. #4
    Featured Member Vamp's Avatar
    Joined
    Jul 2004
    Location
    Missouri
    Posts
    1,111
    Thanks
    271
    Thanked 757 Times in 289 Posts

    Default Re: Can I get approved for a car loan?

    Quote Originally Posted by CallMeJay View Post
    My car died & I need a new one ASAP. I have about 1500 saved up right now. Every dealership wants proof of income which I don't have, but for the last six months I have been making regular deposits in my checking account, an average of about $5-600/week. So far my plan is to tell them that I babysit/do hair/bartend or something along those lines where I'd be getting paid cash & show them my bank statements. Has anyone been in this situation and/or know if a dealership would accept this as proof of income & finance me? I'm looking in the $10,000 range, my credit is below average but not terrible (don't know the exact score) and I don't have a cosigner. Also, I plan to have about $3000 to put down. Any input is greatly appreciated!!!
    There is ALOT of myths about car loans. Having processed alot of car loans for banks I give alot of basic advice.

    Number one NEVER get a loan at a dealership for a used car. You will not get a good deal. Dealerships shop the loan around to the banks they do business with to get themselves the best deal,not the best deal for you.

    Number two go to banks and credit unions. When you walk into a branch you are the customer. Financial institutions will only finalize loans for around the blue book value. What that means is that you can play the bank against the dealership and have some leverage. "Im sorry but my bank will only finalize the loan at this amount. Either you will have to come down on the price or i cant buy it" You can also call the bank with the specs of a car your interested in and find out the blue book value first. So many people go into the car buying process blind and loose money.

    In your situation I would suggest going to www.annualcreditreport.com. It is a government sponsered website. Pull your credit report and pay the five bucks for the credit score BEFORE you start shopping. This credit report pull is considered a consumer inquiry. It will not bring your score down. It will also give you information to take into finanical institutions ie credit score and any issues you have on your report. By taking this is info in with you the loan officer can give you an idea if there is a possiblity or not.

    If you have tax returns and a credit score over 650 you can get a car loan at a bank or credit union. Car loans are the bread and butter of branch banking. So they will work hard to get you the loan if you are just on the line.

    So take in two years tax returns, your credit score, explainations for any credit blemishes, and you should get a good idea if you can get the loan. But only let them pull your credit report a few times so it doesnt bring your score lower.

    If you have any questions please let us know or if your score is under 650. I can help walk you thru improving your score.

    BTW banks and credit unions do not use cosigners anymore. The new rule is that if a loan is shared both parties must be able to qualify on their own or have no credit but positive income.

    Good Luck
    Nature knows no indecencies; man invents them. ~ Mark Twain


  5. #5
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Can I get approved for a car loan?

    So take in two years tax returns, your credit score, explainations for any credit blemishes, and you should get a good idea if you can get the loan
    for the last six months I have been making regular deposits in my checking account, an average of about $5-600/week

    From the OP's comment I inferred that she has only been dancing / camming / whatever other 'non-employee' work for the last 6 months ... which would preclude her having the two years worth of previously filed tax returns to present to a would-be auto lender as verified 'proof of income'.

  6. #6
    Featured Member Vamp's Avatar
    Joined
    Jul 2004
    Location
    Missouri
    Posts
    1,111
    Thanks
    271
    Thanked 757 Times in 289 Posts

    Default Re: Can I get approved for a car loan?

    Quote Originally Posted by Melonie View Post
    From the OP's comment I inferred that she has only been dancing / camming / whatever other 'non-employee' work for the last 6 months ... which would preclude her having the two years worth of previously filed tax returns to present to a would-be auto lender as verified 'proof of income'.

    I am not making assumptions. What I told her to take was the basic information a bank is going to ask for. As I explained if she had questions or issues with it should could ask us.
    Nature knows no indecencies; man invents them. ~ Mark Twain


  7. #7
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Can I get approved for a car loan?

    ^^^ understood ... and a good point to emphasize for the benefit of other Dollar Den readers.

    Since the new post 'subprime mortgage debacle' financial regulations went into effect, the only 100% acceptable way for dancers / camgirls / other self-employed persons to 'verify' their income for banks, corporate landlords, other types of lenders, etc. is to present copies of two years worth of previously filed tax returns to the lender. This obviously requires that the tax returns have been previously filed, and that social security tax, medicare tax, federal income tax, and if applicable state income tax, has previously been paid on the money reported to have been earned.

Similar Threads

  1. Car Loan?
    By misselise07 in forum Other Work
    Replies: 8
    Last Post: 05-15-2011, 06:27 PM
  2. Getting someone off car loan
    By punkpixie001 in forum The Lounge
    Replies: 6
    Last Post: 04-19-2008, 12:16 AM
  3. car loan vs car lease
    By jaizaine in forum Dollar Den
    Replies: 10
    Last Post: 07-31-2007, 04:20 AM
  4. Non-Citizen Car Loan
    By Lysondra in forum Dollar Den
    Replies: 6
    Last Post: 10-09-2006, 07:42 PM
  5. yeah! I got approved for a car loan!!!
    By emily1015 in forum The Lounge
    Replies: 6
    Last Post: 01-08-2006, 06:31 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •