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Financing a Car Loan as a Worker who Relies on Tips

Financing a Car Loan as a Worker who Relies on Tips

Can you get a car loan as a worker who relies on tips? We asked our Halton auto loans team to explain your options if you’re in this position.


The short answer is that lenders don’t really care where your income comes from as long as it’s legal. They care more about how regular that income is and whether it’s reliable enough to pay for a car loan without making life unaffordable.


Car Loan as a Worker who Relies on Tips


If you work in a diner, restaurant, café or drive for Uber, tips are a big part of your take home pay. It’s only right that you would want that income taken into account when you’re looking for a car loan.


Basic pay for this type of work is generally low, so anything extra you earn is usually hard won and very welcome!


To qualify for a car loan as someone who relies on tips, you need to do the following:


Check your credit score


As you have ‘non-standard’ employment, you’ll need a good credit score to qualify for an auto loan. The more you want to borrow, the higher your credit score needs to be.


If you don’t have a good credit score, you may struggle finding a cheap car loan in Halton. We can help though.


Collate as much evidence of your earnings as possible


You will need documentary evidence of any income you want taken into account for a car loan. That means pay stubs and bank statements, plus any other formal paperwork for income.


The trouble with tips is that they are usually cash and usually not documented, or not fully. This is usually where someone relying on tips will have most trouble.


Without documentary evidence, a bank statement showing how much you put in the bank each week or month isn’t always enough.


Unless you have some formalized way of calculating and documenting tips, you may struggle having them taken into account.


Consider using a cosigner


Working with a cosigner is an option as a temporary or tip worker. As long as they have a good credit score and sufficient income to be able to pay the loan if you cannot, they would be a good bet.


Their credit score is taken into account with yours and their presence on the loan can be enough to swing the decision your way.


As long as your own part of the application clearly shows you can afford the loan.


A cosigner guarantees the loan, they don’t pay it for you. Which is why you still need to pass affordability.


Save for a larger down payment


One way to improve your chances of getting a Halton car loan is to use your tips to save for a larger down payment. The larger the down payment, the more reassured lenders will be.


It also means you can borrow less, which is another way to increase your chances of getting the loan.


Nothing is impossible but staff who rely on tips can have more trouble than most when it comes to borrowing. If that’s you, contact one of our team and we’ll see what we can do!


If you need help or advice on anything to do with auto loans in Halton, contact Car Nation Canada today, we can help!


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