In the words of Bob Dylan, ‘the times they are a-changin.’ The traditional work environment of an employer-employee relationship is transforming, and the breakdown of the old-school workplace, along with advances in technology, has given rise to alternatives for earning a living.
6.4% of the population are self-employed, an entrepreneurial freedom that certainly comes with its own obstacles, including the pandemic causing many business owners to put their passions aside for the time being. However, such challenges also include being less likely to be approved for loans, whether it’s to buy a car or a house.
Self-employment shouldn’t create barriers to financing a car of your own. A vehicle is a necessity, not a luxury, so keep reading on how you can qualify for a car loan while self-employed.
Show Control of Your Finances
First and foremost, you should alert HMRC of your self-employed status to pay the appropriate taxes. With that out of the way, you can focus on your credit. Your finances should be in good order to maximise your chance of getting approved for a loan.
You can chip away at your debt by paying more than the minimum balance on your credit cards, reducing any unnecessary monthly expenses and selling unwanted gifts and household items.
Maintaining a healthy credit score will improve your chances of acquiring a decent loan. Remember that if you are self-employed car finance, you will need to show at least three months worth of bank statements as proof of income.
Even if you have a poor credit score, car finance brokers such as Quick Car Finance may be able to secure you a loan or give you guidance on steps you can take that may help you be approved soon.
Hire Purchase Car Finance is a Great Way to Build Your Credit Score
A hire purchase (HP) contract enables you to buy a car based on your available income, and divide the overall purchase price of the car into cost-effective monthly payments.
An advantage of a HP loan is that you can improve your credit score over time as you make the monthly payments on your car. As long as you continue to repay on time, it’s a win-win situation.
Applying with a Poor Credit History
You may still apply for finance if you have a bad credit history. When accepting your application, the lender will take your credit status into account to give you the best possible rate at a price you can afford. You will then be able to repay your loan based on your financial situation, and gradually improve your credit score, allowing you to obtain better loans in the future.
Zero Deposit Car Finance Option
With a 0 deposit option, you don’t need to pay any upfront fee when you purchase your car. Instead, the total sum is broken down into affordable monthly payments. There are three variations when choosing to put down no deposit for your car:
- Part exchange ? If you already have a vehicle, you can exchange it with the dealership and cover the cost of what could have been a deposit.
- Spread out repayments ? The original cost of the deposit is added to the monthly repayments for your car.
- Good credit score ? If you have a good credit history and can prove that you have paid previous loans on time, this can grant you flexibility when financing a car. If the dealer is confident that you will make your payments on time, this could include payments without covering the cost of a deposit at all.
There are lots of important details to remember when applying for a car loan, but a reputable broker will always guide you through the process. Get in touch with us here to discuss your options.
Keep being your own boss and treat yourself to a brand new car!