Self employed and in need of car finance?
25 April 2023
By Joy Pearson
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Self-employment offers a great degree of flexibility and independence, but it can also come with it's own set of challenges. One of these challenges is obtaining car finance. While it may be daunting, there are several options available to self-employed individuals who are in need of a car.
Now it's important to understand the different types of car finance available to those who are self-employed. The most common types are Hire Purchase (HP), Personal Contract Purchase (PCP), and Personal Loans. HP is where you pay a deposit, followed by monthly payments, and at the end of the agreement, you own the car. PCP is similar to HP, but you have the option to purchase the car at the end of the agreement or return it. Personal loans are typically unsecured loans that can be used to purchase a car outright.
When it comes to obtaining car finance as a self-employed individual, lenders will typically ask for more documentation compared to an employed applicant. This can include bank statements, tax returns, and proof of income. It it important to have these documents in order to improve your chance of being approved for car finance.
Opinions on self-employed car finance can vary. Some individuals believe that it can be more difficult to obtain car finance as a self-employed person due to the perceived higher risk associated with self-employment. Lenders may see self-employment as less stable that traditional employment, which could lead to higher interest rates or more stringent requirements for approval.
However, others argue that self-employment can actually be an advantage when it comes to car finance. For example, if you are able to provide a strong track record or income and business stability, lenders may view you as a lower risk borrower. Additionally, as a self-employed person, you may be able to deduct car expenses as business expenses on your tax returns, which can help offset the cost of the car finance.
Ultimately, the key to obtaining car finance as a self-employed person is to be prepared. Have all necessary documentation in order and be ready to provide additional information as needed. Shop around for the best deals and don't be afraid to negotiate. With the right approach, is it possible to obtain car finance as a self-employed individual and enjoy the freedom and flexibility that comes with owning a car.