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Valued Member

## Dumb question on stated monthly income

I know this will sound like a dumb question, but my parents went for a car loan and got turned down saying the stated income was more then actual income.

He put he made \$2,426 a month \$14.00 x 80 x26/12 + \$2,426

The finance company did \$1,120 x 9 (times he been paid so far this year) = \$10,080 /4 (months in the year so far) \$2,520 - 1120(the first pay check in May)= \$1,400 a month.

Due to being paid bi-weekly he gets either 2 checks in a month or 3 checks. I always thought to get monthly income they use the formula my dad did. Are we wrong? Should he go to another finance company or is the way they are figuring it right?

Fico scores 6/1/14 Ex 680 Eq 668 TU 692

Cap 1 Unsecured \$750 / Cap 1Secured \$200 / Kay's \$300 / BOA \$500 partial secured / Badcock account \$1,200

Denied: Kohls, Discover IT, Barclays, DCU
Message 1 of 7
6 REPLIES
Moderator

## Re: Dumb question on stated monthly income

crystal0920 wrote:

I know this will sound like a dumb question, but my parents went for a car loan and got turned down saying the stated income was more then actual income.

He put he made \$2,426 a month \$14.00 x 80 x26/12 + \$2,426

The finance company did \$1,120 x 9 (times he been paid so far this year) = \$10,080 /4 (months in the year so far) \$2,520 - 1120(the first pay check in May)= \$1,400 a month.

Due to being paid bi-weekly he gets either 2 checks in a month or 3 checks. I always thought to get monthly income they use the formula my dad did. Are we wrong? Should he go to another finance company or is the way they are figuring it right?

It's not a dumb question at all.

Sounds like a new job for your Dad. Was his last job in the same pay range? Or did he have a big gap? If he had a big gap it might be the way this particular lender has to say "no". It happens.

Have him go to another CU and bring his paystubs/bank statements.

Message 2 of 7
Valued Member

## Re: Dumb question on stated monthly income

He has been at this job for years. He gave his last pay stub as proof of income. I think she just made a mistake and he is going to call in the morning.

. He shows \$10,080 ytd through 4/29/14 pay day was 5/2. So I guess it should have been \$10,080 / 4 (Jan, Feb, March, April) = \$2,520 which would be close to his figure. This makes sense to me.  No idea why she kept subtracting 1 pay period and coming up with \$1,400 a month.

Fico scores 6/1/14 Ex 680 Eq 668 TU 692

Cap 1 Unsecured \$750 / Cap 1Secured \$200 / Kay's \$300 / BOA \$500 partial secured / Badcock account \$1,200

Denied: Kohls, Discover IT, Barclays, DCU
Message 3 of 7
Moderator

## Re: Dumb question on stated monthly income

Good idea. Could be human error. It happens.

Message 4 of 7
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Regular Contributor

## Re: Dumb question on stated monthly income

Definitely human error on her part.  She was attempting to figure out the average pay for full-months.  There's no reason to subtract 1120 from the AVG monthly income.

Her math should have been (10,084 - 1,120) = 8,964 / 4 = 2,241.

Subtracting 1,120 (since it was paid in May) from the YTD income and then divide by 4 will give the average for 4 full-months.

But the method you stated in the OP is correct since he's paid every two weeks.  In the future, take the hourly rate x 2080 hours then divide by 12.  ie, 14 x 2080 = 29,120 / 12 = 2,426.67.  This equation will always provide the annual and average monthly income without having to worry about how many pay periods (due to twice a month or every two weeks) to multiply.

Message 5 of 7
Valued Contributor

## Re: Dumb question on stated monthly income

If you can get them to recon it. But seriously, there's plenty of sensible lenders. Don't be afraid to go to another local CU or bank that's less anal/makes less mistakes lol.

For an urgent question Monday thru Fridays, feel free to email me directly remembermyfico //at// gmail /dot/ com if you need a response in 24 hours.
Message 6 of 7
Epic Contributor

## Re: Dumb question on stated monthly income

What is his credit reports and scores look like?

What kind of car is he looking at?

"Usually" in my experience most dealerships don't even ask for pay verificaiton if credit is good, if it is good he just might need to find a dealership that is a little less stickler and a little more interested in getting the car out the door with less questions!

Infiniti and Kia in my experience on multiple cars over the years don't seem to ever ask for income verificaiton as long as your DTI is covered!

Message 7 of 7