2 Minute Guide to Buy a Car when Self Employed in Halton

2 Minute Guide to Buy a Car when Self Employed in Halton

Posted on March 17, 2022

It’s 2022, and we are all trying to adjust to whatever the new normal. With some mandates easing, you might now be interested in buying a car when self employed in Halton

If you want to buy a car when self employed in Halton, there are some things you should be aware of to avoid any disappointments.

What is your current credit score?

The first thing you should do is review your current credit score to see which category, you fall into. Credit scores of 720 or higher are considered prime territory, which is where you want to be.

If your score is in the 600’s you can get a competitive car loan in Halton Hills. Anything under 600 is considered subprime that carries the highest interest rates.

Most self-employed Canadians put their business purchases on their personal credit cards. This is quite convenient, but it can wreak havoc on your credit score.

When you carry a large amount of debt on your credit cards, it will bring down your credit score, making it harder to get lower interest rates.

Income verification challenges

One of the biggest challenges you will experience when buying a car as a self employed worker in Halton is going through income verification. Lenders want to see consistency when issuing a loan, and being self-employed is anything but predictable.

Since lenders are not set up to project income for self-employed borrowers, you will need to provide a series of documents.

The first thing that the lender will want to look at is your bank statements for the last couple of months, ideally six.

Along with the bank statements, these lenders are going to ask you for access to your income tax for the last two years. All of this documentation may seem troublesome, and it can, but this is the reality faced by most self-employed Canadians.

Are you going to be using the vehicle for personal use, work, or a combination of the two?

Suppose you are using the vehicle for work purposes.

In that case, you may be able to write off some of the operating costs on your taxes (speak with a tax expert about your specific situation).

However, if you do use the vehicle for work, you will need commercial insurance, which incurs higher premiums.

Where to buy cars when you are self-employed

There is a shortage of new and used cars all around the world, so you will need to adjust your expectations when shopping. You may not be able to get a vehicle that checks all of the boxes on your wish list right away.

Your best option is to go through a local car dealership that has a track record of success working with self-employed Canadians like you.

These dealerships will know which lenders are willing to underwrite self-employed car loans and which to avoid. The dealership will also help you find the right car, which is helpful given the chronic shortage.

Now that you know how to get a car loan when you are self-employed, you can head over to your local dealership today and start looking at your options in greater detail.

We’d love to help you buy a car when self employed in Halton. Simply fill in the form below and we’ll get back to you ASAP or see our selection of new and used cars at our Brantford dealership.

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