Opening a line of credit or financing a large purchase often means providing proof to a bank or lender that you have sufficient income to allow you to pay back what you owe.
If you have a job and a regular paycheck, this might not be a problem. The issue is proving to your employer that the information provided on your paperwork is accurate.
That’s where a proof of income letter comes in. Keep reading to learn what this letter is and how to provide one to get the financing that you need to buy a car, rent an apartment, or open a new bank account.
What is a Proof of Income Letter?
When you want to buy a home, rent an apartment, or purchase a car, you can expect to start the process with plenty of paperwork.
Alongside your full name, address, and contact information, you’ll also need to give the lender info about what you do for a living, where you work, and your income.
While you will need to provide this information on your application, this often isn’t enough for the lender. Anyone can make up a job title or claim that they work for a certain employer, especially if they know that the information won’t be verified.
In addition to your application, many lenders will also ask borrowers to provide a proof of income letter, also known as an employment verification letter. This is a letter signed by your employer that verifies information about your job.
How to Provide a Proof of Income Letter
If you’ve been asked for a proof of income letter for the first time, you might be wondering how to go about it.
While you can ask your boss or manager to write one for you, it may be easier to write it yourself and then get approval and a signature from your boss. For busy managers, this is an easy way to avoid any confusion or mistakes.
Information that you should include in your proof of income letter includes:
- Your dates of employment, including your start date and end date, if you are no longer employed there
- Job title
- Current Salary
If your employer writes your letter for you, they can also include a positive note about the employee and their work ethic. This isn’t always necessary but can be useful if the employee is trying rent a competitive apartment.
How to Provide Proof of Income if You’re Self-Employed
Getting a proof of income letter requires you to have a boss who can verify this information.
But if you are self-employed, this might be a challenge. Even though you may make enough to easily meet your payments on an apartment or mortgage, you might not have the proof that you need to show the lender what you make.
If you need to provide self-employment proof of income, a paystub is often a better choice.
You can use an online paystub generator to create a paystub to prove you have a steady monthly income from your work. This is an easy way to prove your self-employment income and let lenders know that you can afford future payments.
Providing Proof of Income From Your Employer or Self-Employment
When you need to show a lender that you can afford a mortgage, car payment, or rent, a proof of income letter or paystub is the way to go.
If you found this article helpful, check out the rest of our blog for more financial advice.