If you're self employed you should be able to get accepted for car finance. The fact that you're self employed wouldn't be a reason for a lender to reject your application. As with any application for car finance the lender wants to be know that you'll be able to make the stated payments on your finance agreement.
The first decision to make if you're self employed is whether you will apply as an individual or on behalf of the business.
If you decide to apply as a business, the business will need to have been trading for a minimum of 2 years and the net profit will need to be at least double the amount that you're looking to borrow.
If you apply as an individual, being able to prove your income is a big part of the finance application for someone that is self employed. Getting car finance requires you being able to prove a regular income via bank statements or other documents that will be important in the process.
You may have read that if you have a Good credit rating you don't need to prove your income. However most lenders are having to change the way they assess finance applications due to the FCA, and even if you have a Good credit rating, this will now be important.
The type of work that you undertake might also be a deciding factor in your application. For example, some lenders will not provide car finance for self employed taxi drivers, as they sometimes use the vehicle they are financing for work purposes. When this happens the vehicle tends to travel more miles, reducing the value far more quickly than a car that's used for casual day-to-day driving. For more information, see our commercial vehicle finance section.
Car finance for self employed people is not as complicated as it may first seem. However, if the information on this page doesn’t answer your self employed car finance questions, please contact us via LiveChat so we can discuss this further with you.
This is one of the most frequently asked questions we receive. It's actually very important to be able to prove your income if you're self employed. Without having proof that you consistently earn enough money to cover the loan repayments, you'll be seen as a high risk by a lender. As we mentioned above, the way that the FCA is regulating lenders means that even prime lenders will look at the level of income that their customers take home to ensure they can afford the repayments, whereas this decision used to be made based on your credit history.
If you're self employed and are unable to prove your income, you can help yourself in a couple of ways. Firstly, make sure that your credit file is accurate and up to date. If you're not on the Electoral Roll we would highly recommend changing this. If your credit rating is accurate and you can afford a deposit, you should try to put as much money towards the car as possible as this will help to share the risk of the loan with the lender.
Another option for self employed people with no proof of income is to use a Guarantor or a joint application on your loan. This will lower the risk you pose to the lender and may aid in the acceptance of your car finance application.
If you can’t find the topic you’re looking for here, please take a look at the rest of our Help section on employment or talk to one of our Customer Advisors today by using our LiveChat service.
If you require further assistance, our team of Customer Advisors are here to help. We're open six days a week - you can view our opening hours here - and we're more than happy to answer your questions.