You’re ready, this time you’ve decided to buy a new car, your new job or self-employed life is going well. You’ve visited car dealerships, searched online on the car-buying sites, and you have decided on the car that you’ll buy.
You check your finances, but you don’t seem to have enough cash to purchase your car, but there’s always another option. Of course, you know about car finance as an alternative since you’ve researched a lot about buying a car.
There are four crucialdocuments needed to buy a car on finance, and one of them could be hard for you to provide. It’s the proof of income document because you are self-employed, retired, a freelancer, or have a new job, whichever the situation it’s hard to provide it since you can’t provide payslips.
Does it mean that the 4.37 million self-employed people in the UK, according to Statista, can’t get car finance without payslips? In this article, you’ll know if you can get car finance without payslips or proof of income.
But first, let’s see the documents that you need to provide for car finance.
What Documents Do I Need To Finance A Car?
You’ll be asked to provide three common documents, which include your proof of identity, proof of income, and address history. For proof of identity, the easiest way to prove is with a driver’s license. However, you may also be asked to provide a photo ID or a passport in other instances.
The second document is proof of income which you can provide three months’ payslips or bank statements. If you can’t offer payslips in some instances, then the car finances providers may call your employer to get more information and know that you’re truly employed. This instance is most common when you are newly employed since you can’t provide the three-month bank statements.
If you are worried about your employer knowing about your car finance application, there’s no need to worry. While the car financers will call your employers, they cannot give out any information.
The third document needed is your address history, where they’ll check your past and current addresses and whether you’ve been a resident in the UK for a minimum of 3 years.
To prove you have been living at that address, lenders check if you’re on the electoral roll. The current and past addresses help lenders track the borrower in case of failed payments.
Do You Need Payslips For Car Finance?
The question has been commonly asked a lot of times. The simple answer is “no” you don’t need to provide payslips for car financing. Not all lenders will accept car finance without a payslip, but some will.
They assess if the amount of income you get from your hustle is enough to repay the loan. They will also check if you get a consistent monthly income, the highest you’ve had, and the lowest.
Can I Finance A Car with No Proof Of Income?
To simply answer the question “Yes,” car finance providers will offer car financing even if you can’t provide proof of income. They will check your credit score to determine if you’re eligible to get a loan, but that doesn’t assure your chances of getting car financing.
Here are ways that you could use to increase your chances of getting car financing without proof of income:
- Make a larger deposit than average which reduces the cost of the loan.
- Work on improving your credit score. If your credit score is on the poor side, you could improve it to a better level, like paying your debts.
- Conduct more research on the car financing providers that can offer car loans without proof of income
- Provide the last two years’ tax returns to the lenders, proving you can pay the installments or interests.
- Pay your bills on time and become a registered voter to improve your credit score and credit history. Not being on the electoral roll leads to a negative impact on your credit score.
Why Do Finance Providers Need Proof Of Income?
Car financing is equally the same as getting a loan from a bank. The bank will want to know how much you have and if you can repay the loan. They give you money in hopes that you’ll pay for it. They assess your information and know if you can repay the loan as it is still a business.
Like bank loans, car finance providers offer different finance options and give cars to the people that can repay them. This is why they ask for specific documents and conduct credit checks to know if you’ll repay.
Telling the lenders, the amount of income you have won’t ascertain you earn the actual amount. Proof of income answers their question of knowing the amount of income you get and the amount you spend. It helps them see if you can manage to pay for the car and how much of your income goes to expenses.
Choosing car finance to upgrade your car is a more preferred method as we say, “you get to pay in simple, flexible monthly installments.” To be approved for car financing, you need to prove your identity, income, and address.
While you may prove your identity and address history, proof of payment can be hard to provide, especially if you don’t have payslips to offer. Leaving the question, can you get car finance without payslips? Yes, you can.