388 King George Rd, Brantford, ON, N3T 5L8
My Garage

Self Employed Car Loans: How to Get Approved in No Time

Self Employed Car Loans: How to Get Approved in No Time

Being self-employed comes with a lot of benefits such as being your own boss and having a flexible schedule, but it also means that you may face some challenges when it comes to obtaining financing, including car loans.

 

However, being self-employed doesnā€™t necessarily mean that you canā€™t get a car loan. Hereā€™s what you need to know about car loans when self-employed in Canada.

Get Pre-Approved in 2 Minutes or Less.
All credit scores accepted & no down payments required.

Apply Now

Proving Your Income

 

One of the biggest challenges self-employed individuals face when applying for a car loan is proving their income. Unlike traditional employees who receive a regular paycheck, self-employed individuals often have fluctuating income streams.

 

This can make it challenging for lenders to assess your ability to make regular payments on a car loan.

 

Business Financial Statements

 

One way to overcome this challenge is to provide your lender with your business financial statements. This can include your income statement, balance sheet, and cash flow statement.

 

These documents will provide a comprehensive overview of your businessā€™s financial health, including your income, expenses, and profits. Additionally, if you have been in business for a few years, you can provide your lender with your tax returns to further demonstrate your income.

 

Itā€™s important to keep in mind that the lender may not take your entire income into consideration when assessing your ability to make payments on a car loan.

 

They may only consider your net income after deducting business expenses, taxes, and other obligations. Therefore, itā€™s a good idea to prepare yourself for a lower loan amount or higher interest rate.

 

How Stable is Your Business?

 

Another factor that lenders may consider is the stability of your business. If you have been in business for a short period of time or have a history of fluctuating income, lenders may be more cautious when considering your loan application.

 

However, if you can demonstrate a stable income stream and a healthy business history, it can increase your chances of being approved for a car loan.

 

Another option for self-employed individuals is to consider a secured car loan. A secured car loan requires you to provide collateral, such as your home or another asset, to secure the loan.

 

secured vs unsecured loans

 

Because the loan is secured, lenders may be more willing to approve your application since they have a way to recoup their investment if you default on the loan. However, keep in mind that if you default on a secured car loan, you risk losing your collateral.

 

Alternative Solutions

 

If youā€™re self-employed and struggling to obtain a car loan, itā€™s important to shop around and consider different lenders. Different lenders may have different criteria for approving car loans, so itā€™s worth exploring your options.

 

You can also consider working with a mortgage broker who can help you find a lender that specializes in providing car loans to self-employed individuals.

 

Being self-employed doesnā€™t mean that you canā€™t get a car loan. However, it does require some extra effort and preparation to demonstrate your income and financial stability.

 

By providing your lender with your business financial statements and tax returns, demonstrating a stable income stream and healthy business history, and considering a secured car loan or working with a mortgage broker, you can increase your chances of being approved for a car loan as a self-employed individual.

 

If you're ready for a car loan, we'd love to help with that! simply fill in the form below to get started.

Car Loan Pre-Approval

    Preapproval

    Categories: Car Loan

    Tags: ,