Can I use a letter of offer to get an auto loan?


In some cases, it is possible to obtain an auto loan with a letter of offer as proof of employment. However, if you have bad credit, the lender may need to look a little further. Here are the documents you can use to prove your income and how your credit score can determine your course of action.

Proof of income: letter of offer

A letter of offer is a letter from an employer stating that you have been hired. It usually includes things like your projected salary / hourly salary, start date, benefits, and other information. Usually, an offer letter is sent to you once you’ve been selected for the job, and the letter is what you use to determine if you want to accept the job offer.

Typically, check stubs are used to prove your source of income for a car loan. If your credit score is good or excellent, a lender may not care too much about your proof of income. If you’ve just accepted a job and have a letter of offer in hand, but need a vehicle before you get that first pay stub, it may be possible. Your credit score is a reflection of your credit repayment history, and if you have a good history, a letter of offer may be sufficient to meet income requirements.

However, with bad credit it can be a different story.

Subprime lenders – third-party lenders have signed up with special funding agencies that work with low-credit borrowers – typically need a recent computer-generated check stub with the cumulative income for the year listed. Subprime lenders use your minimum monthly gross income to determine if you have enough income to pay off a car loan. Typically, they require you to earn around $ 1,500 to $ 2,500 before taxes each month.

If you only have one letter of offer and haven’t officially started yet, or haven’t received a check yet, it can be difficult to get a car loan. There are, however, gray areas to this standard requirement.

Gray Areas of Bad Credit Auto Loan Income

Each auto lender varies in their specific requirements, and that includes what they may and may not agree to in terms of proof of income. Typically, subprime lenders will ask you about your last three years on the job as well as other requirements. Many of them require that you have not had a gap of more than 30 days between jobs before considering an auto loan.

Here are some unique work situations and how subprime lenders may view them:

  • Your very first job – If you have a letter of offer for your first job and it is your only proof of income, you may have to wait before being considered for a subprime car loan. Subprime lenders rely on your work history and source of income to get a better idea of ​​you as a borrower, and without at least six months to a year, it can be difficult to get a car loan.
  • Change of job in the same field – If you have just landed a new job, a subprime lender might be willing to work with you if it is the same area of ​​work as your previous job (s). For example, if you have been a nurse for four years and this new job is another health care position in another practice, a letter of offer may be acceptable because you are staying in the same field.
  • Contract worker – Not everyone has a W-2 income; many borrowers have 1099 sources of income with self-employed status. If your field of activity involves accepting several different contracts frequently, but it is the same field of activity, you may be considered for funding. Be aware that many subprime lenders typically require two to three years of tax returns as proof of income for 1099 income.
  • Multiple sources of income – If you have more than one source of income, such as two part-time jobs or unearned income such as alimony or social security, your additional sources of income may be considered. However, with two part-time jobs, a sub-prime lender is likely to consider how long you’ve been on both jobs, and many only need one source of income to meet initial requirements. Along with additional income like alimony, it can be used to lower your debt-to-income ratio.

These are just a few examples of the unique work situations borrowers can find themselves in when trying to get a bad credit auto loan. Some borrowers find themselves in even more difficult credit situations, such as bankruptcy or repossession, but subprime lenders are often able to help in these circumstances as well. As long as you can prove your ability to pay off a car loan by meeting all of the lender’s requirements, you might not be out of the game for a car loan.

Find a dealer

Car dealerships are everywhere – in fact, you might have a few in your hometown! Lenders are also common, especially direct lenders such as credit unions, banks, and online lenders. However, many traditional lenders are unable to help borrowers with poor credit, and asking for a lender that is not suitable for your credit situation could lead to hassle, stress, and wasted energy. But here at Auto Express Credit, we want to reach out.

We have created a coast-to-coast network of special finance dealers that help borrowers with bad credit. If you are ready to hit the road with an auto loan, then complete our free auto loan application form. We are looking for a reseller specializing in finance in your area!

Leave A Reply

Your email address will not be published.