For many people self-employment is great! You can be your own boss; choose your own working hours and choose the jobs you take on. Many people think that being self-employed means that you will struggle to get approved for self employed car finance. However, that isn’t strictly true. Whilst it can be a little harder to get finance, there are many car finance provides who accept self-employed people. There are a few easy ways in which you can improve your chances of getting approved.
Improve your credit score
There are many easy ways in which you can improve your credit score. You can still get car finance with bad credit but it can be easier to get approved if you have a better credit score. You could consider:
- Paying all your bills on time and in full
- Registering on the UK electoral roll
- Contact your credit referencing agency to disassociate any financial partners with bad credit
- Fix any mistakes on your credit file
- Close any unused credit and bank accounts
- Check your file for any fraudulent activity
- Limit the number of credit applications you make in a short space of time
Put your income into a UK bank account
Many lenders will ask for your income and affordability and this can be proven by supplying bank statements. Your workload can vary when you are self-employed and sometimes you can be paid cash in hand too, this can make it hard to verify your income. If you get paid cash in hand, it is recommend that you open a UK bank account and deposit your earnings in each month prior to a car finance approval, this way you can provide at least 3 months’ worth of bank statements which shows your income and can increase your chances of getting approved.
Employment and address history
When you apply for self-employed car finance, potential lenders will need to see a minimum of three year’s employment history, three year’s address history, and you’ll need to have been a UK resident for a minimum of five years. Potential lenders are looking for evidence of stability in employment and address history – the longer you have been at your current job and address, the better.
Consider putting down a deposit
Having a large deposit can increase your chances of getting approved for self-employed car finance. This is because you ultimately borrow less from the lender which is good for them and also you. Borrowing less means you can reduce your monthly payments and ca in some cases reduce the amount of interest you will pay back. Having a deposit indicates to lenders that you are more likely to pay your loan back on time and in full as you are better at manging your money.
What documents do you need?
If you have all your all your car finance document sorted it can speed up the process once you’ve been approved. The documents you need to have to hand include:
- Driving license and proof of identity
- Proof of income
- Address history
How do you qualify for self-employed car finance?
For many car finance lenders, as long as you can say yes to the following criteria below, you can be offered a car finance deal!
- Have 3 months’ worth of bank statements
- Lived in the UK for 3+ years
- Are 18 years or older
- Hold a full UK driving licence
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© Maria Taylor 2020