SELF EMPLOYED CAR FINANCE
Many people who are self-employed will have experienced some issues, at times, in finding car finance.
Why is that the case and much more importantly, what can you do to overcome it if you’ve been affected?
The good news
The first message to be clear on is that it may be possible to secure self-employed car finance!
However, you may need some assistance in doing so and that’s where we at RL have extensive experience. So, don’t despair – contact us instead.
It is perhaps worthwhile explaining why this can be an issue for some lenders when considering a car loan for self-employed people.
Lenders and risk
A typical lender considering a car loan will need to ask several questions of the proposal in front of them, including two that are particularly important:
can the potential borrower afford the loan / will they be able to repay it in line with the repayment schedule? It’s worth noting that this is a legal obligation on lenders – they are not free to ignore it;
what are the risks of the borrower struggling to keep up repayments and subsequently defaulting on the loan?
Lenders have sophisticated methods of establishing these two things. In the case of employees, these methods are typically relatively easily applied. It’s possible, for example, for lenders to consider with employed applicants:
how long they’ve been in continuous employment;
the evidence of their monthly income via their payslip;
letters from employers and/or contracts of employment;
the probable security of their employer’s business; etc.
In the case of the self-employed though, such risk-assessment becomes far more difficult or in some cases even impossible.
For that reason, some lenders may decline to car finance for self-employed people. Others may do so but only under multiple restrictions or by applying inflated interest rates etc.
Getting self-employed car finance
Nobody can absolutely guarantee car loans for self-employed people. A lot will depend upon your exact company status and things such as your credit score.
What is imperative though is to avoid simply making multiple random car loan applications in the hope you’ll get lucky. The reason for that is simple – every time you’re turned down for finance it’ll be noted on your credit history files. Multiple refusals will make your credit score look worse and your challenge in finding self-employed car finance that bit more difficult.
Instead, contact us at CarFinance Plus and allow us to assess your position. We will then be able to establish a loan application route that’s more likely to be successful.
What you’ll need
Our joint primary objective will be to fill in as many as possible of those information gaps that can cause concern to potential lenders.
That’s why you’ll typically need:
some evidence of your company formation if you’re a Limited Company;
if you’ve produced formal accounts, copies of these going back preferably two years;
in situations where you’re a relatively new start-up, evidence of your overall financial position in the form of bank statements;
some evidence of how much income you’ve taken from the business in the recent past (typically going back 3-6 months);
if your business is very new and can’t provide evidence of your income, it will necessary to see payslips or other forms of income from the period before you started your business;
proof of your place of residence over recent times. Continuity of place of domicile is very important and lenders may need to see you’ve been at your present address for at least 12-24 months;
possibly evidence of your existing debts including monthly mortgage outgoings (or rent), credit card bills and so on.
The more paper evidence you have of your overall personal and business position, then the more your chances of success will be in applying for self-employed car loans.
Why not contact us for a further discussion?