If you are self-employed, you might need a car or van more than many other people – it is your essential workhorse for getting from one job to another and, if you are a tradesman for example, used to carry your tools and materials.
When you need the vehicle, you may also need car finance – and that might often prove a problem for the self-employed.
Why is it a problem?
The main problem is securing car finance for the self-employed stems from any lender’s primary concern to minimise any risk of the loan going unpaid.
Lenders therefore look for a measure of reassurance in the borrower having sufficient regular income from their employment.
As the website Safe Workers, points out, in the case of salaried employees, this proof of income is relatively easily obtained just by asking the employer for a letter confirming that the applicant earned such and such an income or by asking for bank statements.
Many lenders do not accept applications from the self-employed and those that do typically require copies of the last three years of your bank statements and even a letter of confirmation from your accountant. If car finance is eventually secured the self-employed may still find themselves paying a higher than usual rate of interest.
However, there are brokers who specialise in arranging car finance for self-employed applicants – and put up far fewer obstacles to proving your income. By adopting a more flexible approach to confirming your income, such lenders make it possible even for those who have only recently taken up self-employment to secure the car finance they need.
Remember, though, that there is no such thing as guaranteed car credit for the self-employed. In addition to the documentation you may need to provide to demonstrate a regular and sufficient income, any lender also needs to conduct a check of your credit record.
Once again, though, even if you are self-employed and have a poor credit record, there are some specialist car finance brokers who may still be able to secure the credit you need. They are first likely to conduct their own “soft credit check” or “quotation search”, to assess the likelihood of any formal application for a loan to succeed, so that you do not run the risk of multiple rejections adversely affecting your credit status still further.
If you are self-employed and looking for car finance, therefore, you might want to discuss your needs and requirements with a specialist car finance broker.