Self-Employed Car Finance

Working for yourself can certainly have its advantages - but you'll need to keep a keener eye on your finances.

If you're applying for car finance whilst self-employed, one key aspect is to demonstrate to lenders your ability to keep up with repayments.

Finding the right lender in this situation is important, as is the need to ensure you can back yourself up in terms of your financial stability.

Can I get car finance if I am self-employed?

When you work for a company and receive a fixed salary, lenders can confidently predict your future income and expenses.

However, working for yourself is a little more difficult because there are no assurances.

There may be months when you work non-stop and are paid on time by your customers or clients, and then there may be months when things go more slowly, and you have to follow up late payments.

So when it comes to car finance, and you're self-employed, some lenders are more cautious about accepting you for credit.

As a result, you will likely need to jump through a few more hurdles than most to get credit for a car.

Car finance brokers, such as Stoneacre, often work with a selection of lenders who can help provide car finance for those self-employed in a variety of jobs, such as independent contractors, agency workers, and temporary employees.

How do self-employed workers prove income for car finance?

If you work for yourself, it may be more challenging to prove your income.

Our lender partners may request bank statements from you or encourage you to sign up for open banking, which can help them better understand your income and expenses.

Here is what to prepare when applying for car finance when self-employed:

• Bank statements or tax returns demonstrating regular income, usually over a three-month period.

• Consider open banking, where you can allow banks and other third-party service providers to access your financial information.

Car finance for self-employed with bad credit

An additional pain point for those who are self-employed could be that they have bad credit.

If you've struggled to build up a reputable credit score, then getting accepted for finance could very well be that much harder.

But, again, specialist lenders can help in such situations; meanwhile brokers such ourselves offer a free eligbility check that won't harm your credit score, regardless of the outcome.

Can I get car finance through my business?

It is possible to finance a car through your business, but you might have to pay a tax called Benefit in Kind (BiK). Be mindful, however, that the user must pay income tax for using the car for personal purposes as a result.

Companies can finance their car purchases through a variety of methods, including business loans, hire purchase agreements, and leasing agreements.

If you want to get credit for a car through a limited company, there are also other factors to take into account.