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How to get a car loan when you are self-employed

How to get a car loan when you are self-employed

If you want to buy a car in Stoney Creek but are classified as self-employed, you are in the right place. We have put together the quintessential guide of what steps you must take if you want to get a car loan while self-employed; just stick with us until the end, and you will come out fine.

What type of self-employed individual are you?

There are many different ways a Canadian could be self-employed.

They could be working solely for commission as a real estate agent, while the agent works under a large real estate company; they only earn a commission off what they sell, so they are, in essence, self-employed. Another example would be a medical doctor running his/her own practice.

These doctors do not draw a salary but instead bill Medicare for all of the patients they see.

The way you structure your self-employed business impacts how prospective lenders underwrite the loan. Most Canadians are self-employed as sole proprietorships because it is a simple legal structure.

What you need to know about car loan providers in Stoney Creek

These lenders are under tremendous pressure to issue car loans, especially now that the Bank of Canada is increasing interest rates to slow inflation, which makes each new car loan more expensive to underwrite.

Higher costs mean tighter profit margins for lenders, so they need to be extra careful.

The lender will issue a loan provided the borrower meets their credit and income underwriting requirements.

Your credit score needs to be over 600 to qualify for a conventional car loan in Canada. You could get a car loan if your credit score is under 600, but the interest rates will be usurious.

Where things get complicated for self-employed borrowers is proving their income. Since you are self-employed, your income varies depending on the industry and market conditions you are facing.

Some months may have higher incomes than others, so what you can do is provide the prospective lenders with copies of your bank account statements for the last 12 months.

This will give them the ability to average out your monthly income and determine what the maximum car loan you can afford is.

All of this may feel like an unnecessary hassle but remember, the lender wants to issue the loan; they just need to make sure you are a safe bet.

Where to find a competitive car loan when you are self-employed in Stoney Creek

While there are numerous websites that offer car loan quotes online, don’t waste your precious time on these websites. Your best option is to go through a local dealership that has been serving your community for years.

These dealerships have helped self-employed borrowers throughout the years get approved for a car loan, and they can also help you, even if your income is hard to prove or your credit score is low.

You should head over to your local dealership now and begin reviewing all of the different options that are available. With rising gas prices, you might consider making the switch to an all-electric vehicle; the dealership will show you how much money you could be saving.

We will use all our skill and experience to deliver the lowest possible Stoney Creek auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

Categories: Auto Loan

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