Car Loans for People who Rely on Tips in Puslinch

Car Loans for People who Rely on Tips in Puslinch

Posted on September 2, 2021

If you’re a worker who relies largely on tips for income, you have a harder time than many when it comes time to get a car loan. Nothing is impossible though, especially with the right advice and the right team behind you. We asked our Puslinch auto loans team to outline the considerations when it comes to car loans for people who rely on tips.

Car Loans for People who Rely on Tips

There are thousands of workers throughout the country who rely on tips for income. Kitchen staff, waiting staff, food delivery drivers, rideshare drivers, hairdressers and many others get a very basic wage and are expected to make the rest up through tips.

That’s fine on a day to day basis but can prove a challenge when you want to borrow money.

Here are a few tips to help you get a car loan if you’re a tip worker:

Save as much as you can for a down payment

The more you can put down, the less you’ll need to borrow. It also reassures lenders that you’re putting your own money at stake, which shows them you’re serious.

Most important is lowering the amount you need to borrow. Borrowing modestly means you may be able to qualify for the loan without having to mention tips, which makes life much easier!

Record tips formally

Tips are supposed to be formally recorded by your employer but not all of them do. Some employers depend on you reporting tips while others will allocate tips from a central pot.

If you want to use tips as part of your loan application, you’re going to need a more formal tracking system than you might already have.

Your main challenge might not be getting your employer on board but convincing other staff members to declare their tips too!

Declare tips to tax

Yes, we know that tips are a perk that you don’t want the tax authorities to know about. But if you declare them on your tax return, you can use them in your loan application.

Your tax return is a formal document of income, which you can use in a car loan application. Without tips being mentioned, it’s difficult to take them into account.

It does mean you’ll be paying tax on your tips though…

Buy used instead of new

If your income is insufficient to borrow enough for a new car, why not consider a used car instead? They should be much cheaper and require a much smaller loan.

If you could qualify for less without having to use tips or declare them, the situation should be much more agreeable.

The standard of used cars, when bought from dealerships, is much higher than it used to be. Often, there is very little compromise between buying something brand new and buying something a couple of years old.

We won’t pretend that qualifying for a Puslinch car loan if you depend on tips is easy, because it isn’t. What we will say is if you approach the situation in an organized way, anything is possible.

Contact Unique Chrysler for help, advice and competitive Puslinch car finance and leasing.

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