Self-employed? Need to arrange financing for your next car? If you’ve got sterling credit, no problem.
What if you have “less” than a sterling credit rating? You can still get financing. But you can expect to jump through some hoops to get anything approaching decent terms.
From a lender’s perspective, the self-employed seem to fall into two distinct classes. For the person with a sterling credit rating, there aren’t any obstacles. Unless you’ve got a lot of debt. In this case, the lenders will want you to prove your income. This is so you can demonstrate your ability to repay the car loan.
With less than sterling credit, it’s a given that the first priority of the lender is solid proof of your income.
The lenders will want your last 2 years of tax returns. And this sometimes presents a few problems. One of the reasons that people opt for self-employment is so they can take advantage of tax deductions that just aren’t available to employed people.
And that’s where the rub comes in. Whenever you load up your deductions to the point where you’re only claiming a small income, you’re going to experience some real difficulty. The good news is that there are a number of lenders that will take that into account. They will look closely at your deductions and will then count a few of them as income. Not many – but there are a few.
Don’t have 2 years of tax returns? There are a few lenders that will accept your bank statements. Be prepared, though. They will want full statements for the last 6 months. And they will charge you for it. From their perspective, you just fell into a higher risk category.
Now, if you don’t have either of these – your choices will get real limited real fast. And the reason is pretty simple. No tax returns + no bank statements = no business. Their rule, not ours. In their eyes, you’re nothing more than a tax-dodger.
Now that we’ve shared this wonderful news with you – let’s move on. There are a few more items that you’re going to have to provide in addition to proof of your income:
- Proof of your residence (a home phone bill or utility bill – no past dues or cutoff notices)
- A copy of your most recent phone bill (home phones preferred – they want to know they can call you)
- A list of personal references (friends, relatives – they’ll want 10 of them) with full addresses and phones
- Complete landlord information or a copy of your most recent mortgage statement
Knowing up-front what you’re going to need will get you prepared. Once you’ve satisfied all the documentation requirements, the finance process actually will go quite smoothly.
As one last requirement, the lender will call you, personally, for an interview.
This is not the time for you to get an attitude. It will cost you your loan. Simple courtesy goes a long way in establishing a good rapport with your new financial partner. They will document everything – including their impression of you during the interview. This is definitely the time for you to make a good impression.