Car Loans for Flat-Rate Technicians and Commission Earners in Alberta

A lender wants to see what your pay usually is, and that it will keep coming. A pay stub is one pay period. When your pay moves with the work, one stub can look high or low. One bank’s credit-granting page puts the second half this way: “Based on your employment history, it must appear reasonable that your income will continue into the future.”

The same page says: “A T4 slip or a pay stub is generally required as minimum proof of income. Depending on the type of income you earn (for example, if you are self-employed or a contracted employee) and the type of loan you require, more information may be requested.” In other words, a T4 or a pay stub is the usual minimum, and some kinds of income get more questions.

None of the lender or loan-guide pages listed at the foot of this page gives a formula for flat-rate or commission pay. They list documents. How much of your variable pay a lender counts is each lender’s call, and we cannot give you a formula. For overtime, shift premiums and bonuses, see what car lenders verify when you work.

Five papers do most of the work. Each one shows a different piece of the picture.

The T4 counts commissions. The Canada Revenue Agency says: “Employment income consists of amounts that you receive as salary, wages, commissions (see line 10120), bonuses, tips, gratuities, and honoraria.” “Employment income is usually shown in box 14 of your T4 slip.” On commissions it adds: “Report on line 10120 of your return the total commissions shown in box 42 of all your T4 slips received as an employee. This amount is already included in your income on line 10100 of your return.” So if part of your pay is commission, your T4 can show that part on its own line, in box 42.

Lenders list their own papers. One credit union’s page asks for “Two sources of income verification.” and says: “If you’re a salaried employee, this would be your last two paystubs or a letter from your employer and either your most recent T4, Notice of Assessment (NOA) or the previous year end paystub.” A bank’s car-loan guide lists “Proof of income and employment (Pay Stubs, Employment Verification Letter, Tax Returns, Bank Statements)”. Another bank’s page lists “A recent T4, T4A or T1 tax document with notice of assessment” as one way to show proof of employment.

Missing a stub? Alberta’s Employment Standards page says employers must “provide employees with a statement of earnings for each pay period” and “keep employment records for 3 years”. If you need an older stub, ask your payroll office.

There is no one number, and every lender sets its own list. One lender asks for two sources of income verification, another for one proof of employment. When your pay moves, bring more than the minimum so a lender can see the pattern without guessing.

• Your last two pay stubs.
• A longer run of recent stubs. One loan guide says: “Be sure that you have records going back at least three months.”
• Your year-end pay stub, or your latest T4.
• A letter from your employer (next section).
• Bank statements that show your pay going in, if a lender asks.

It should explain the pay plan. A loan guide says: “One of the most essential parts of any letter from your employer is your salary information and pay/compensation structure.” For a flat-rate or commission job, ask your payroll office or manager for a letter on company letterhead that gives:

• Your job title and your start date.
• How you are paid: flat rate, hourly, commission, or a mix.
• If there is a base amount or a minimum number of paid hours, what it is.
• Your pay for the last year, or your usual range.

Some lenders contact your employer directly instead of asking for a letter. Give your manager a heads-up so the call goes smoothly.

The payment does not change, but the picture does: it is about 9% of the best month and 16% of the slowest. A lender may look at one stub, a few months or your T4, and we do not know any lender’s formula. The example only shows why the longer record helps.

A common rule of thumb is a payment near 15% of gross pay. In the slowest month this payment is a little over that line. That is one reason to size the payment against a slower month, not your best one.

Check it against a slower month, not your best. That is our suggestion, not a lender rule. If the payment still fits a slow month, a busy one is a bonus.

To try your own numbers, use the payment calculator. To see what your pay can carry at each score band, read the loan size your pay can carry. For how pay and credit work together, see good income, bad credit car loans.

A recent change means a shorter pay history. Bring your offer letter, or a letter that describes the new pay plan, with your first stubs. How lenders handle a new job is on our page about starting a new job in Alberta. Other pay that moves is covered on oilfield worker car loans, seasonal worker car financing and gig worker car financing.

The quickest start is the online application. Tell us how you are paid. We review every application and call you back. Or call us at (825) 736-4438. If you run your own shop, see self-employed car financing.