Car Finance Options For The Self Employed
What difference does it make if you are self-employed when looking for car finance?
The biggest problem you are likely to encounter is that lenders are likely to make it more difficult for you to arrange the necessary credit – either increasing the rate of interest you need to pay or rejecting your application outright.
If that has been your experience when previously trying to secure car finance, talk to us here at Forza Finance and we are likely to be able to help – with any number of different car finance options to suit your needs.
Your credit rating
Any UK lender is obliged by the industry regulator, the Financial Conduct Authority (FCA) to assess the creditworthiness of any borrower – for the protection of both lender and borrower, in the interests of responsible lending.
When you apply for a loan or any kind of credit, therefore, the lender is bound to conduct a credit check against your financial records held by the UK’s main credit reference agencies – there are three of them: Experian, Equifax, and TransUnion (formerly called CallCredit).
The credit check is designed to assess the affordability of any credit you have requested and to give the lender an indication of how you have managed such debts in the past.
Crucially, it also requires you to provide any lender with some evidence of your current earnings – and, if you are in regular employment, an indication of what you will continue to earn throughout the period of any loan.
Car finance options for the self-employed
And this is just where the self-employed may come unstuck.
Whereas the employed person has payslips, maybe a letter of appointment and an indication of future career progression, the self-employed person has none of that. The lack of such documentary evidence of a firm and steady income may be enough to make many a lender decline any application by the self-employed for car finance.
It might then turn into a vicious circle or Catch 22 situation where the self-employed person – anyone from a tradesman to a company director – needs a car for work or business to pay for a loan which is denied from the outset.
To secure a loan from more amenable providers – such as ourselves here at Forza Finance – therefore, you may need to provide audited accounts of your business income for the past two years or so. Additionally, or alternatively, you might want to provide a certified copy of your annual tax summary which clearly shows the earnings you have reported to HM Customs & Revenue for self-assessment income tax purposes as a self-employed person.
Armed with these alternatives to the payslips otherwise submitted by an employed individual, therefore, we are typically able to arrange car finance for the self-employed.
The options – just as for anyone else – then range from Personal Contract Purchase (PCP) agreements, lease hire, hire purchase, finance leases, personal loans, seasonal payment plans, and contract hire.
Being self-employed, therefore, is no barrier to securing the car finance you need if you consult us here at Forza Finance.