Self-Employed Car Finance
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Being your own boss comes with many benefits, but deciding your own holidays and making your own hours can be overshadowed when it comes to a situation that requires a steady income, such as self-employed car finance.
Self-employed car finance can be a little more difficult to obtain because essentially, you don’t necessarily have a guaranteed monthly income and where there is an income, it’s rare the same amount is coming in every month. Car finance lenders usually assess your income and decide to give you a loan based on a number of factors, including affordability. Being able to afford your monthly repayment is what you need to display to the lenders.
What lenders will want to know
Now that you’ve established that lenders will want to you prove your monthly income, you will need to prepare any documents or information they may want to see.
Lenders may also request to see a bank statement. Why your bank statement? Well, lenders will want to see your accounts for the last three years. This only used to be asked of those who have a bad credit score, but it’s becoming increasingly popular for lenders to ask for a bank statement even if you have a good credit rating.
All money that is claimed as your income must be shown in a UK bank account, in order for it to be considered by lenders. Please note that cash in hand is not an eligible proof of income when applying for self-employed car finance.
Lenders are looking for stability in the person they finance, so it’s normal for them to ask for your employment and address history.
If you are unable to prove your income, then there are a number of things you can do to help your case. Making sure your credit file is up to date is essential, as well as ensuring you are on the electoral roll. To maximise your chances of getting a loan when you don’t have proof of income, you should put a large deposit towards the car as this will share the risk of the loan with the lender.
Applying for self-employed car finance on behalf of your business
Some business owners may be looking to finance a car for business use, such as a company car. This is possible, as long as you have been actively trading as a business for at least two years.
Self-employed taxi drivers aren’t an attractive customer to lenders because they would use the taxi car much more often than a personal car, increasing the wear and tear and risk of damage. For these reasons, self-employed taxi drivers are too high of a risk for most lenders. There are however, lenders that will consider finance for taxis.
Whether you’re applying for self-employed car finance personally or on behalf of a business, it’s important to be completely truthful to be in with a good chance of being accepted.
Car lenders will find out of you aren’t being transparent when stating your income, which can be even more damaging in the long run.
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