It is believed that people who are self-employed or have a bad credit history cannot qualify for car financing or a loan. However, the good news is that although it can be difficult, it is not impossible to obtain the funding to buy a car. In Loans no money down car financing, we are often asked about car financing, so we thought it best to provide some very common answers for all those who are struggling to obtain the funding to buy a car.
Car financing for independent or self-employed workers
The biggest obstacle when working on your own is to demonstrate income. It is likely that lenders want to see a paper before approving applicants for a loan, and failure to provide that document is the cause of most obstacles when applying for financing, the typical problem being for independent workers. Fortunately, all is not lost. The first job you have to do is answer the following questions:
Are you going to use the vehicle mainly for commercial purposes?
If you plan to utilize the car for business, you need to provide an audited business account. Maximum banks need that you have one for the last two years, but do not worry; there are some who are satisfied with the previous year. If you have not yet requested an audited financial statement, it is a good idea to do so before applying for any car financing.
Have you filed a tax return?
Self-employed individuals usually do not file their tax returns. However, declaring taxes is indispensable for many lenders. In spite of this, some lenders can request substitutes for tax declaration to verify the income in case an applicant can not provide one, such as bank statements, monthly receipts, et cetera.
Can you leverage your finances?
If you have considerable savings, you can use them to make a more substantial down payment. Most lenders set the down payment at 20 percent, but if you can get up to 50 percent, you will improve the chance of getting your loan or financing approved if you are self-employed. In the same way, if you are currently paying a mortgage and you never lose a payment, then this shows your lender that you are stable and that you are a good payer, increasing the probability of being granted a loan.
Do you feel comfortable disclosing personal financial information?
It is very likely that your lender acts like a police detective trying to discover any reason to disapprove your loan, so anything you say or declare, will investigate it. It is necessary that you do not speak anything which is not real, especially in the state of your income and finances. If your lender discovers the truth, you might think you’re trying to defraud him, and you could find yourself in severe trouble. You must be precise with your statements, always protect your privacy, and know the limit of the information you provide (only share what is strictly necessary).