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This allows people to take out way more car than they can afford, no wonder there are thousands of repos a year.
Proof of income should be required for all people regardless of credit
Unlike a house, a car is easy to repo so the bank will still come out ahead without waiting months or years to recoup their losses.
Heck, some of the buy here, pay here lots will repo the same car 3-5 times and still make a decent profit off it so I can only imagine a regular financed car.
The last few cars I've purchased have been over $50K in sticker price, and I've never once been asked for a single proof of income. Not a bank statement, not a pay stub, nothing. I have credit over 800, so I don't know if that's why, or if my history of buying a $50K car every year (trade-in frequently) serves as evidence that I can afford it.
When I had average credit I put a down payment of $10k on a car and financed $30k. They never verified my income, asked for any pay stubs, or called anyone. APR around 4.5%.
Went through a few bumps in the road and now I have poor credit, and last month even with $5k down payment and only financing $10k the dealership needed pay stubs, proof my previous car loan was entirely paid off, and the APR was ridiculous (15%) for me to get financing. I'm paying it off soon.
And this is proof that a higher monthly income per month does not necessarily lead to better terms, because last month when I made this car purchase I had a higher income per month than when I got the first car in this post financed one year ago.
When I had average credit I put a down payment of $10k on a car and financed $30k. They never verified my income, asked for any pay stubs, or called anyone. APR around 4.5%.
Went through a few bumps in the road and now I have poor credit, and last month even with $5k down payment and only financing $10k the dealership needed pay stubs, proof my previous car loan was entirely paid off, and the APR was ridiculous (15%) for me to get financing. I'm paying it off soon.
And this is proof that a higher monthly income per month does not necessarily lead to better terms, because last month when I made this car purchase I had a higher income per month than when I got the first car in this post financed one year ago.
is all about credit, that's all they care about, in fact, they want you default, they make more money that way
Unlike a house, a car is easy to repo so the bank will still come out ahead without waiting months or years to recoup their losses.
Heck, some of the buy here, pay here lots will repo the same car 3-5 times and still make a decent profit off it so I can only imagine a regular financed car.
But ordinary lenders (not buy-here-pay-here) would lose money on any repos with negative equity...
I know that when you have average to low credit, many if not all banks will require, at least, $1500 a month salary. I believe this is gross salary. Would they require the same if you have good credit?
For example, if you have good credit and finance a 20k car, would they need proof of income?
I know a friend who has good credit and makes less than $1500 a month, only works part time, yet he is financing a 20k car.
His rent must be dirt cheap or he has zero debt. Most banks prefer your debt to income ratio to be 36%. This includes rent, car payments, credit card bills are anything that was bought on credit.
Folks with perfect credit don't have to show proof of income most of the time.
My credit score was a 696 when I bought my car and they asked for my pay stubs and the finance company only approves loans with a 36% debt to income ratio or less.
Well you do have to sign your name to that car loan app, lying about income could be considered fraud.
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