Securing a Solid Self Employed Car Loan
Securing a Solid Self Employed Car Loan
Posted on May 19, 2022
Are you running a business or just recently took the plunge? Being your own boss is a liberating experience, but you are going to be facing a series of challenges each and every day going forward.
One of the biggest differences you are going to experience is getting financing for a self employed car loan with no credit score.
Lenders focus on underwriting loans for borrowers that work a traditional job, so anyone who does not conform to their established underwriting will face distinct challenges., as our Simcoe car loans team explains.
Starting a new business with no established credit
Most entrepreneurs in Canada are going to start off with no established credit; it takes time to build up your tradelines.
While you are working on building these tradelines, you will probably use your personal credit cards and lines of credit to float the business.
While this is the easiest way to access working capital, if you are not careful, it could put you behind the proverbial eight-ball.
What most entrepreneurs do is use their personal credit to finance the business, but that will hurt your credit score and make getting a car loan even more difficult.
Documenting your business income
Since you do not have established credit, your income is going to make all the difference.
How long have you been running your business, and do you have any contracts in place with your clients?
These documents are proof that there is a transaction relationship between you and your customer; there should be a dollar amount indicated in the agreement, which is going to show that your business is legitimate and you will be receiving consistent income.
While having contracts from your existing clients is helpful, you will need to provide copies of your income tax notice of assessments and bank account statements.
Lenders need to determine how much cash you are bringing in on a monthly basis.
Lenders use your rolling monthly income when using their debt-to-income ratio calculation.
Generally speaking, lenders will not approve a loan if your debts are more than forty percent of your gross income. There is some flexibility with this number, but 40% seems to be on the high-end of the spectrum.
Finding lenders that are willing to see the big picture
While there are lenders who cater to self-employed customers like you, you will not be able to find them online.
The only way you can get a self-employed car loan with no credit is with the help of a professional car dealership in your area. These dealerships have helped borrowers like you get approved for a car loan.
The dealership is going to take its time getting to know you and your business; based on their assessment, they will be able to select the lenders that are most likely to give you an amazing deal.
Since the dealership already has a relationship with these lenders, it makes it easier for them to negotiate the most competitive terms possible.
Now that you know where to find a self-employed car loan in Canada, you should contact the local dealership now and start exploring your car-buying options.
We’d love to help you find a self employed car loan with no credit score. 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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