Running your own business or working for yourself can be really rewarding! You get to choose your own hours and work when you want, what could be better? But what happens when it comes to applying for loans or car finance? It can be a little harder to get approved for self-employed car finance, but it doesn’t mean that it’s impossible! Refused Car Finance, a car finance broker based in the North East of England, explains how you can increase your chances of getting approved for car finance when self-employed.
Clean up your credit
No matter what you’re employment status is you should always try to get your credit in the best position possible. People with good credit benefit from lower interest rates which means you pay less overall for your finance. However, if you are applying for bad credit car finance, you can still get an affordable finance deal. You should get into the habit of checking your credit score regularly and fix any mistakes on your credit file and make sure all your information is up to date. You should settle any debts that you currently have and also pay any existing bills on time and in full. You can also register on the electoral roll to help lenders verify your living address.
Provide your bank statements
It can be hard to obtain self-employed car finance when you have a vary in income. Car finance lenders want to know you can afford to pay back your loan through an affordability check. During an affordability check, they will look at your incomings and outgoings on your bank statements. It’s crucial that you don’t borrow more than you can afford to pay back as you can end up in more financial difficulty. If you get paid cash in hand, you should regularly deposit this into a UK bank account to show lenders how much you earn each month.
Save up for a deposit
If you’re applying for car finance on a used car, you can help your application by putting down a deposit. Even just saving up for a few months can help your car finance application. Having a deposit to put down means that you don’t have to borrow as much from a lender and can take out a smaller loan and have lower monthly payments and less interest.
Consider a joint application
If you are struggling to get approved for self employed car finance, you could consider a joint car finance application to help you get approved. A joint car finance agreement is usually with a partner or family member and when two people apply for finance on the same vehicle. Both applicants are legally responsible for meeting the repayment deadline on a car. You should only enter into a joint car finance agreement if you know you will be able to meet the repayment deadline. If not, both parties may have their credit score affected negatively if they fail to make the repayments.
Keep your accounts up to date
Previously, lenders used to ask for 3 years trading accounts for self employed applicants but in recent years some lenders only need 1 year worth of evidence. It’s crucial that you keep your accounts up to date and if you don’t its worth thinking about using a registered, reputable accountant to help do this for you. This will make the finance process much more streamline.