How Many Pay Stubs Do I Need For A Car Loan?

While you're ready to buy or finance your car, you may then ask, "How many pay stubs do I need for a car loan?" Most lenders would typically require two of your most recent pay stubs. They'll use this information to verify your income. 

However, you should note that the number of pay stubs needed can still change. It depends on your pay period, your credit history, and even the type of job you have. 

We're here to walk you through it all, as we'll break down how the entire car loan process works. You'll understand why your pay stubs are important while applying. Also, know other documents you may need to gather for your loan approval if your pay stub isn't available. In this case, you can use free paystub templates to create one online.

How Many Pay Stubs Do I Need for a Car Loan?

If you're wondering, "How many check stubs do you need for a car?" or "How many pay stubs do I need to finance a car?" Usually, when you're getting your papers together for your car loan applications, you need to have a clear target.

Generally, for auto loan requests, you would need to submit pay stubs from your last two consecutive pay periods. This is a way for the financial institution, like the banks, credit unions, dealership office, to know you have a consistent income. They can see your current income and confirm your employment stability. 

How Many Paychecks Do You Need To Get a Car, Depending on Your Pay Schedule?

This section is specifically for those who wonder, "How many months of pay stubs for car loan?" As mentioned earlier, the "two-month" rule refers to a time period, and not a specific document count. So here's what you should do based on your pay schedule: 

• If You Get Paid Bi-Weekly: Give them four or maybe five pay stubs to cover two full months.

• If You Get Paid Semi-Monthly (Twice a Month): With this, you'll have to submit exactly four pay stubs.

• If You’re Paid Monthly: Then you'll just need your two most recent stubs.

How Many Pay Stubs Do You Need To Buy a Car? When You’ll Need To Provide More Pay Stubs

Sometimes, your two-month pay stub may not be enough in certain situations. The lenders may ask for additional documentation, like three to six months of recent pay stubs. They could request it if:

• You have a poor credit history

• You don't have a steady income.  

• You have a high debt-to-income ratio (DTI).

• You're asking for a really big loan amount to pay for a really expensive vehicle.

• You just started a new job, or haven't been with your current employer for very long.

Read more:Do Paychecks Expire? How Long Is A Payroll Check Good For

Why Should You Use Pay Stubs for Income Verification

You might be asking, "Why are pay stubs such a big deal?" It's simple. Before a lender lets you borrow money, they need to verify your income to be sure you can pay it back.

To Prove That You Can Handle Payments

Their main goal is to be sure that you're capable of having enough income to cover your monthly payments. With your pay stub income verification, it proves that you can consistently pay up. Even with your other bills.

To Check Your Employment Stability

When you have consistent pay stubs from the same employer, this indicates job security. It shows that you have a steady income. With this consistency, it tells them you have income stability and a reliable cash flow.

To Access Your Debt-to-Income Ratio (DTI)

During any car loan process, your DTI ratio is highly essential. Here's how it works: the lenders add up all your minimum monthly debt payments. Divide them by your gross monthly income. If, after calculating, it turns out that you have a low DTI, this makes it hard for your loan approval to get approved. A low DTI is one that's under 35% or less.

Also check:Choose a pay stub template to create your pay stub proof of income immediately.

What Lenders Look for on Your Pay Stubs

On your pay stub, Lenders check your: 

1. Employer Details and Pay Dates

Since this is usually the first section of your paycheck, they'll have to check these details. They confirm your name and your employer's information, and your pay dates as well. All of the details here simply need to make sense and should match what you wrote on your application.

2. Gross Income and Net Income

Mostly, lenders would focus on your gross income. This refers to your earnings before taxes and deductions. They use this number to determine your DTI and estimate what monthly payment you can afford. Your take-home pay, which is your net income, is also important to know for your budget. 

3. Year-to-Date (YTD)

The year-to-date totals are your earnings for the entire year, and they show that your income and taxes are consistent. With that said, the numbers on your recent pay stubs need to match what you have on your YTD total. If it doesn't, then this could be suspicious. 

How Lenders Verify Income

For lenders to verify your income through your pay stub, they have a system they use: 

1. Document Check: The finance manager checks the document closely. They confirm that your fonts and formatting look consistent. Are the pay stubs from the same employer? 

2. Cross-Reference: They can compare everything on your stubs, including your name, employer, income, and dates. They compare this with what you put on your credit application.

3. Confirmation Call: They can also decide to contact your current employer's HR or payroll office. They call them to confirm your job title, if you still work there, and then your income. 

Red Flags That Make Your Pay Stubs Suspicious

These are some red flags that could indicate you have a fake pay stub:

• Obvious Changes: White-out, funny fonts, or unclear numbers.

• Math That Doesn't Add Up: Having YTD totals that are obviously incorrect.

• Information That Doesn't Add up: Pay period dates that are off, or an employer phone number that's disconnected.

Read more:What Is A Void Check and How To Obtain One?

Other Documents You Can Use as Proof of Income

Especially for freelancers, business owners, and gig workers who may not have an available pay stub, they need alternatives.

For the Self-Employed and Independent Contractors

Here are other documents you could use instead:

• Tax Returns: You could use your last two years of federal tax returns as your best bet. They may want these in order to understand your real annual earnings after your business expenses. They may also check your Schedule C, which is your Profit or Loss from Business.

• 1099 Forms: These are forms that show the income your clients paid you as a contractor.

• Bank Statements: So, "How many bank statements do you need for a car loan?" Use your 3-6 months' bank statements, including your personal and business statements. This can show that you have lasting profits and a healthy cash flow. 

For Other Types of Income

If your income source is from retirement, investments, or legal agreements, use:

• Award letters for Social Security or pension benefits.

• Court orders for alimony or child support

• Investment statements to show dividend or interest income.

Applying for a Car Loan With a New Job

You might not have recent pay stubs from your job because you just started, so you can:

• Provide your official offer letter, which comes with a statement of your salary.

• Showing tax returns from your previous employment.

• Adding a co-signer who has a good credit history and income.

Getting a Car Dealership Loan Without a Good Credit Score

With a low credit score, lenders most likely need to be more convinced that you can pay. You can:  

• Have a Larger Down Payment: This reduces their risk and the amount that needs to be loaned.

• Find a Co-Signer: Find someone with good credit to co-sign for you.

• Provide your bank statements and proof of income to balance out the poor credit.

Also check:Are you looking for a W2 maker to create your W2 form? Generate your document now. 

Your Complete Auto Loan Document Checklist

Let's explain what you'll also need when you need to get your car loan:

1. Proof of Who You Are, and Where You Live

It could be your:

• Driver's License: A valid, government-issued photo ID.

• Social Security Card for identification.

• Proof of Residence

• Utility bills that were issued to you in the last few months, your lease agreement, or your mortgage statement. They should include your name and address.

2. Proof of Insurance

You need to have your active auto insurance, and it has to be according to the regulations in your state. Only then can you sign and take the car. You need to have information ready about your agent or a photocopy of your insurance card.

3. Your Credit and Down Payment

It's a good idea for you to examine a copy for any sort of inaccuracies. Another thing you may be required to offer, if applicable, is to prove that you have your down payment. This can be a recent account statement showing that funds are in the account.

Your Pre-Approval Action Plan To Boost Your Car Loan Approval Odds

It's a good idea for you to prepare over a few months to save money. Here's how you can go about it: 

90 Days Out

• Check Your Credit Report: Get your credit reports. If you notice any errors that are damaging your credit score, this is the best time to fix them.

• Start Saving: It's also the best time for you to begin to save your down payment for the car. With a bigger down payment, you could end up receiving better terms. 

• Gather Your Documents: Find your last two years of tax returns and start a folder for your pay stubs.

60 Days Out

• Pay Off Debt: Reduce your credit card debts to increase your debt-to-income ratio.

• Don't Open New Credit: Don't get a new credit card or a new loan.

• Verify Your Stubs: Always make sure your stubs are correct and that you have what you need.

30 Days Out

• Get Pre-Approved: Go to your bank or credit union. This way, you know your budget.

• Packet Organization: Finally, have a final folder containing your paystub proof of income, proof of residency, your driver's license, and proof of insurance.

Further reading:Is A Pay Stub Proof Of Residency? What Counts As Proof Of Address

Final Thoughts

So, while asking, "How many pay stubs do I need for a car?" Essentially, a minimum of two pay stubs is what you need to own your car. However, you still need to understand the car loan process and your options. This can help in increasing your chances of getting approved, and with a good interest rate as well. As explained in this article, you can follow the 90-day plan to help you get your dream car.

Want an easy way to stay organized and avoid pay issues altogether? You can use our paystub generator to create professional pay stubs in minutes.