How self-employed car loans work in Welland

How self-employed car loans work in Welland

Posted on November 18, 2021

A growing number of Canadians are now classified as self-employed. If you are self-employed and want to buy a car, it may seem like there are many hurdles in front of you.

Our Welland car loans team are going to explain the process so you can realize your goal of buying a car.

What is your business classification?

This is a key question and will impact the documents you will need to provide to prospective lenders. Is your business incorporated or is it a sole-proprietorship?

There is no right or wrong answer, if you are like most Canadians running a sole proprietorship then prospective lenders will need to see your bank statements and income tax notices for the last 2-3 years.

If you are running a corporation then the documents required are more straightforward and usually, your payslips would be sufficient.

Credit score needed for self-employed auto loans in Welland

Aside from having enough verifiable income, the prospective lender is also going to need to look at your credit score. You should aim to have a credit score of 680 or higher if you want to get prime auto loan interest rates.

You could get a Welland car loan with a credit score under 680, but the interest rate you end up paying may be considerably higher.

Primary causes of a low credit score

There are two primary reasons why your credit score is low, either you are carrying too much debt and/or you are not paying your bills on time.

If you are carrying a significant amount of debt, anything over 35% debt to income, then you are considered a higher credit risk and your score will be lower than someone with no debt.

While a high debt to income ratio will weigh down your credit score, missing payments will have the most negative impact on your credit score. Even if it was a simple mistake where you forgot to pay your cellphone or some other smaller debt.

You can save yourself a tremendous amount of hassle and money by using a preauthorized payment so you will never miss making your payments again. This simple step will save you thousands of dollars throughout your life.

Finding the right car buying expert

As a self-employed individual, you need to get expert help if you want to get a competitive auto loan and great customer service.

You will need to reach out to a local reputable car dealership that has experience working with self-employed borrowers.  These dealerships can negotiate a much lower interest rate on your behalf than you could ever secure on your own.

The reason the dealership can get you such a great deal on interest rates is they do a huge amount of volume and lenders are willing to do whatever it takes to make the dealership happy.

For you to be happy, you need to follow our advice and book an appointment with the local dealership now, the sooner you schedule the appointment to meet with them, the sooner you will be able to get your brand new car.

When you’re ready for a car lease or loan, get in touch with the Welland auto loan experts at Northway Ford for great deals on auto finance.