When you apply for an auto loan one of the main conditions of approval is that you have the income to make the payments. For many potential car buyers, a paystub or letter of employment is sufficient proof of income. But what happens when you are self-employed and don’t have access to a pay stub to prove that you have adequate income to pay the loan?
At Autorama, we are passionate about helping you drive a car you love. Whether you are self-employed or simply do not have formal employment that provides you with a paystub, we can still help you get approved for an auto loan. In this article, we outline what you need to know about auto financing when self-employed and give you the information you need to be successful in getting approved for the car of your dreams.
For an idea of what you may qualify for, apply for auto financing online with us. We would be pleased to hear more about your situation and assist you in finding the perfect auto loan and perfect used car for sale within our inventory.
How to Get a Car Loan When Self Employed
Being self-employed might make it a little more challenging for you to get approved for an auto loan. But there are a few things you can do to help you ensure that you not only get approved but get a rate that works well for you too. Consider the following tips when applying for credit as a self-employed person.
Strive for Great Credit – one of the top factors that a lender will consider when applying for an auto loan is your credit score. Strive to have an excellent or good credit score to open up possibilities for lower interest rates. Your good or excellent credit score will also assist you in demonstrating that you are a responsible lender who will be capable of making your payments.
Verify Your Earnings – when you don’t have a paycheque to depend on to prove income, your tax returns, and bank statements are helpful for getting approved. Be prepared and have your last two years of tax returns and current bank statements available when applying for an auto loan when self-employed.
Consider a Larger Down Payment – one of the best ways to help your chances of being approved for an auto loan when self-employed is to have a larger than average down payment. Your large down payment will reduce the size of the loan you are asking for while also demonstrating that you have the ability to pay for the car. Many car buyers choose to put a 10-20% down payment on their vehicle, you may wish to consider saving a little longer and having a stronger down payment.
Hold Off Until You’ve Been Self Employed for a While – sometimes, despite your best efforts, your self-employment might be a barrier to getting approved for an auto loan. This is especially true when you are newly self-employed and don’t have much of an income history to prove that you have an adequate income from your business. In this case, it might be worthwhile to wait it out until you have around two years of self-employment to demonstrate your income.
Getting an auto loan when self-employed doesn’t have to be a headache. Contact us today to discuss your personal financial situation. We are passionate about helping you drive a car you love and look forward to matching you with your ideal financing solution.