10

Hard to Find Auto Parts

Hard to Find Auto Parts One of the major problems that classic car owners have is that they have a hard time locating the right kind of auto parts or replacement auto

9

Save Money With Ditchek Auto Parts

Save Money With Ditchek Auto Parts Keeping in view the high costs and high demand of auto parts, a large number of manufacturers are providing used car parts in the market including

8

You Need Quality Auto Parts

You Need Quality Auto Parts As more and more automobiles are coming into the market, the industry of auto parts is automatically witnessing extensive growth. There are several showrooms, online stores, shops

7

Simple home maintenance

Simple home maintenance A recent survey carried out by a UK insurance company showed that as many as 39% of drivers don’t know how to perform even the simplest of safety checks

6

Paint Equipment maintenance

Paint Equipment maintenance Whether you run a a car body repair shop or a mobile car body repair service the maintenance of your paint equipment is paramount. So many problems that can

5

Automotive Paint Maintenance

Automotive Paint Maintenance Regardless of the type of finish, the exteriors of all vehicles are subject to environmental wear and tear. With just a few years on the road, a car loses

4

New Hyundai Fluidic Car Price and Features

New Hyundai Fluidic Car Price and Features Hyundai cars are constantly changing the trends of cars by offering the exclusive looks plus incredible features and specifications. It is the country’s largest car

3

The Importance of Car Maintenance

The Importance of Car Maintenance No normal human being likes the idea of having their car in the shop or paying for car repairs or other maintenance. However, if you own a

2

Used Cars In Coimbatore

Used Cars In Coimbatore Small family cars, classic cars, low budget cars, limited edition cars, muscle cars or Sport Utility Vehicles (SUV), you can buy brand and model according to your requirements.

1

Fashion Magazine Philippines

Fashion Magazine Philippines Together with the Internet, Fashion Magazines are one of the most informational source people often use. They are also known as a guide for us in our daily life.

If you’re an independent contractor or self-employed, you don’t have a W-2 to prove your yearly income. If you receive a 1099 at the end of the year instead of a W-2, you may find it difficult to get approved for a car loan by not meeting subprime lenders’ minimum income and proof of income requirements.

Getting an Auto Loan as an Independent Contractor

Subprime lenders generally require a minimum monthly pre-tax income of $1,500 to $2,000. When you’re a regular employee, a recent computer-generated pay stub can satisfy the proof of income requirement. If you’re self-employed or an independent contractor, you typically need to bring in your most recent tax return (or possibly two or three, depending on the lender) to prove you meet the income requirement.

Where getting approved can get tricky is if you deduct too many expenses or don’t report all of your income. The income after you’ve deducted your expenses on your Schedule C is what lenders look at. If you don’t accurately report what you make, including all tips if you work in a service industry, you could have a problem getting approved for an auto loan.

Debt to Income and Payment to Income Ratios

Besides not meeting the minimum income requirement, you could negatively affect your debt to income (DTI) and payment to income (PTI) ratios. Subprime lenders use your net income listed on your tax return to calculate these ratios. If you actually make more money than you reported, there’s an excellent chance your DTI and PTI ratios are off, which could mean the difference between an approval and a rejection. Most lenders like to see a DTI, including a car and insurance payment, of no more than 45 to 50 percent of your pre-tax income, and a PTI of no more 15 to 20 percent of your income.

For example, let’s say you record your annual income as $28,800 ($2,400 a month), but actually make $38,400 a year ($3,200 a month) and have monthly bills of $1,300. Your reported DTI ratio would be 54 percent and over most subprime lenders’ accepted range, when it’s actually at 41 percent.

As for your PTI ratio, let’s say you have an estimated combined car and insurance payment of $500. Using the same income you listed, the PTI ratio would be 21 percent. If you used the actual income amount, your PTI would be a more reasonable 17 percent.

The Bottom Line

If you’re self-employed or an independent contractor and need an auto loan, you better be listing your income information accurately and avoiding too many expense deductions – especially if you have poor credit. The income after expenses that’s listed on your tax returns is the figure subprime lenders use to qualify you for a loan when you’re self-employed. If your income isn’t the issue, but your credit is, you may still find it difficult to get financed through a traditional lender.

Luckily, our experts at Auto Credit Express can help you get started on the car financing journey. We work with a nationwide network of dealerships that are signed up with special finance lenders that look past your credit issues to qualify you for an auto loan. Take the first step toward getting matched with a local dealer today by filling out our free and secure car loan request form.