Understanding Starter Interrupt Devices: What Car Buyers Need to Know

March 6, 2024

With today’s dynamic economy, there are various employment arrangements involving different payment methods or sources, but many people still get paid in good ol’ cash. While receiving income in cash offers flexibility and autonomy, it can pose challenges when it comes to proving income for a loan, rental, mortgage, financing or other financial endeavors.

At King of Cars, we are a buy here, pay here dealership that provides in-house financing services for our customers, no matter their credit situation, so we deal with customers in this situation a lot.

Generally, we only need 5 things from a client when they submit an application form to get in-house financing for a car:

your two most recent pay stubs
a utility bill
driver’s license (or ID, Passport, etc.)
proof of insurance
and a down payment

But what if you don’t have paycheck stubs? What evidence and support can you provide to get loans, financing, etc?

This article will go into some other options regarding the minimum documentation that we need for cash income verification and that you’ll need to provide to a lender. What way you choose to prove your cash payments will be up to your current situation and what’s easiest or fastest for you.

Income Letter From Employer

If you receive regular payments in cash from your job, then you can provide an employment letter from the organization stating that they pay you in cash. We see people being paid in cash using this method the most.

Here’s a list of things the letter will need to state:

your name and that you work there
how long you’ve been working there
that you are, in fact, getting paid in cash
the amount you get paid in cash each week/month

The letter will need to be on the letterhead of the company you work for and then signed by your employer with their contact information. Employers should have no problem providing this to their employees, but if they do or are taking too long to provide one, there is another option for you.

Tax Return (Your W-2)

Another option you have is to provide your most recent tax return (W-2) that shows your earnings from last year. This option is usually pretty easy for most, as you’ll have your taxes easily accessible in your financial records, and you don’t have to worry about asking (or waiting for) anyone to write you a letter.

Bank Statements

This document is the least popular option, but we have used bank account statements as proof for cash income before. If you provide bank statements, you’ll need to highlight out of the transactions what deposits were your cash income throughout the month.

What If You’re A Freelancer Or Self-Employed?

For self-employment income, the best option is likely to be your tax return, since you won’t have an employer, or you may have multiple clients, and it might be a strange ask or difficult task to get letters from all of them.

Bank statements can also work in this situation if the lender is flexible.

Are There Any Other Ways To Show Proof Of A Cash Income (Invoices, Receipts, Spreadsheet, Accounting Software etc.)?

Some lenders may be open to using invoices, receipts, client contracts or other ways as proof of cash income, but our business doesn’t accept those (and many businesses won’t as well).

The reason being that these types of documents can be generated at any time, meaning incomes could be faked.

Tax returns and bank statements are legitimate, official documents making them more trustworthy than others, due to amounts actually being reported to the IRS or the ability to verify amounts of how much money is actually coming in on record with a bank statement.

Whether you’re looking for a car loan or some other type of financing, you’ll need trustworthy documents — pay stub, tax documents like W-2, a letter from your employer, or a bank statement — where the lender will be able to verify your cash income, especially if you don’t have good credit.

If you have bad or no credit, but can provide the documents listed above, we may be able to get you into the car of your dreams! You can contact us here at King of Cars (or submit your application form online) to see if you qualify for our in-house financing program.

What is a Starter Interrupt Device?

A starter interrupt device (SID), or sometimes known as a “kill switch”, is a technological tool integrated with a vehicle’s GPS system that allows lenders or dealerships to remotely disable a vehicle’s starter. This means while the device is activated, the car won’t start, though it won’t shut off a running vehicle.

Why Do Dealerships and Lenders Use Starter Interrupt Devices?

While not universal, starter interrupt devices have become increasingly common for buy here, pay here lots and financiers of cars to secure their assets by making repossession easier. These can be one of the features of GPS systems that help the lender track the location of the vehicle. Some finance companies encourage their use and provide incentives to dealerships that install the devices.

These devices serve several purposes:

1. Improved Collections: They help ensure timely payments for their loans from borrowers

2. Risk Management: Combined with GPS tracker functionality, they help the company locate vehicles when necessary

3. Financial Incentives: Some lenders offer dealers additional compensation for installing these devices

4. Industry Standard: They’re particularly common in the “buy here, pay here” automotive sector, although not every dealerships uses them

How Do Starter Interrupt Devices Work?

The system operates through a simple mechanism:

• The device connects to the vehicle’s starter system

• When activated remotely, it prevents the vehicle from starting

• Once a payment is made, the lender can quickly reactivate the vehicle through an online command

• The device is typically concealed and may not be immediately visible to the driver

Where Are Starter Interrupt Devices Located?

The main unit is installed somewhere inside the vehicle and has wiring run to the vehicle’s starter under the hood. The device requires connection to a constant power wire and ground. Most installations are designed to be discreet and not immediately visible.

Best Practices and Consumer Considerations

The devices are legal in many states, including Texas, as long as they follow certain guidelines and provide proper disclosure to the customer.

Dealerships should typically follow several best practice guidelines when using these devices:

• Full disclosure to customers before purchase and leaving the lot

• Written acknowledgment from buyers

• Implementation of grace periods (typically 3-4 days) before activation

• Activation during early business hours to allow customers time to make payments

• Installation of backup devices in case of tampering

Tampering with devices may affect financing agreements you have with your dealership or financier.

For consumers purchasing vehicles with these devices:

• Ask about the presence of starter interrupt devices

• Read and understand all documentation

• Know your grace period for payments

• Understand the consequences of tampering

• Keep contact information for your lender readily available

This technology represents a modern approach to vehicle financing, balancing lender security with consumer access to transportation. While controversial to some, when used properly with full disclosure and fair practices, these devices can help make vehicle financing accessible to more consumers while protecting the interests of lenders.

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