With today’s dynamic economy, there are various employment arrangements involving different payment methods or sources, but many people still get paid in good ol’ cash. While receiving income in cash offers flexibility and autonomy, it can pose challenges when it comes to proving income for a loan, rental, mortgage, financing or other financial endeavors.
At King of Cars, we are a buy here, pay here dealership that provides in-house financing services for our customers, no matter their credit situation, so we deal with customers in this situation a lot.
Generally, we only need 5 things from a client when they submit an application form to get in-house financing for a car:
- your two most recent pay stubs
- a utility bill
- driver’s license (or ID, Passport, etc.)
- proof of insurance
- and a down payment
But what if you don’t have paycheck stubs? What evidence and support can you provide to get loans, financing, etc?
This article will go into some other options regarding the minimum documentation that we need for cash income verification and that you’ll need to provide to a lender. What way you choose to prove your cash payments will be up to your current situation and what’s easiest or fastest for you.
Income Letter From Employer
If you receive regular payments in cash from your job, then you can provide an employment letter from the organization stating that they pay you in cash. We see people being paid in cash using this method the most.
Here’s a list of things the letter will need to state:
- your name and that you work there
- how long you’ve been working there
- that you are, in fact, getting paid in cash
- the amount you get paid in cash each week/month
The letter will need to be on the letterhead of the company you work for and then signed by your employer with their contact information. Employers should have no problem providing this to their employees, but if they do or are taking too long to provide one, there is another option for you.
Tax Return (Your W-2)
Another option you have is to provide your most recent tax return (W-2) that shows your earnings from last year. This option is usually pretty easy for most, as you’ll have your taxes easily accessible in your financial records, and you don’t have to worry about asking (or waiting for) anyone to write you a letter.
Bank Statements
This document is the least popular option, but we have used bank account statements as proof for cash income before. If you provide bank statements, you’ll need to highlight out of the transactions what deposits were your cash income throughout the month.
What If You’re A Freelancer Or Self-Employed?
For self-employment income, the best option is likely to be your tax return, since you won’t have an employer, or you may have multiple clients, and it might be a strange ask or difficult task to get letters from all of them.
Bank statements can also work in this situation if the lender is flexible.
Are There Any Other Ways To Show Proof Of A Cash Income (Invoices, Receipts, Spreadsheet, Accounting Software etc.)?
Some lenders may be open to using invoices, receipts, client contracts or other ways as proof of cash income, but our business doesn’t accept those (and many businesses won’t as well).
The reason being that these types of documents can be generated at any time, meaning incomes could be faked.
Tax returns and bank statements are legitimate, official documents making them more trustworthy than others, due to amounts actually being reported to the IRS or the ability to verify amounts of how much money is actually coming in on record with a bank statement.
Whether you’re looking for a car loan or some other type of financing, you’ll need trustworthy documents — pay stub, tax documents like W-2, a letter from your employer, or a bank statement — where the lender will be able to verify your cash income, especially if you don’t have good credit.
If you have bad or no credit, but can provide the documents listed above, we may be able to get you into the car of your dreams! You can contact us here at King of Cars (or submit your application form online) to see if you qualify for our in-house financing program.