For freelancers and the self-employed, it is often difficult to get a loan, because they can not prove a fixed income and are therefore considered a risk group. If it is still about a car that is intended for private use, it will not be easier for you usually. However, this is different when the vehicle is used exclusively or for the most part for business purposes. The opportunities for the self-employed are generally better when it comes to a new project or expansion of the company than when the loan is needed to cover private spending. However, there are a few great ways to increase your chances and save you time in finding the right lender.
Find the right bank
For you as a self-employed, the top priority should be to locate a bank that lends to self-employed people. Here you also have the advantage that these banks are usually specialized in self-employment. Of course, this also saves you time, because you do not have to deal with banks, which only have a dwindling chance anyway.
Only when that’s done can you worry about choosing the right offer. Because for the self-employed, it is superficial to get a car loan at all, the annual percentage rate is secondary.
In a car bank you will probably have the best chances as a self-employed. Here you also have the opportunity to choose between leasing and financing offers. A very positive impact on your chance to receive a commitment has a down payment. Usually, banks here require 20-25 percent.
Preparation is half the battle for a car loan
To further increase your chances of making a commitment and speed up the editing process, you should already have all the documentation you need. These include tax assessments and business settlements. Often, you also need to issue an authorization to obtain bank information from your account-holding bank. If you have everything ready and pay the VAT and have a positive payment history, your chances are good.
Since self-employed workers generally have to wait a little longer to be accepted or rejected than employees do, they should exhaust all opportunities to speed up the process. Among other things, you can put some pressure on your house bank so that issuing bank information takes place without any delays. A faster and more promising processing is also given if you can submit the loan application together with your spouse, who is in a permanent position.
The credit rating
In so-called unsecured installment loans, as well as the car loan, banks check their credit rating under very specific criteria. For example, your job, your age and the amount of your income play a significant role. Your household bill will, after all taxes, calculate your free disposable income. The higher this is, the lower the risk of the bank and the higher your credit rating.
If you fulfill all these points and can provide the bank with good business accounts, they have a good chance to get a car loan for the self-employed, to the special conditions as they apply to private customers granted. If you have a negative credit rating, you will unfortunately have to expect much higher interest rates.
5 Tips on Car Loan for the Self Employed
1. Check credit bureau in advance
Every self-employed person must have a clean credit bureau in order to take some form of credit. This of course also applies to a car loan, because even a small entry can lead to the loan request being rejected.
Therefore, you should get an extract in advance. This can be obtained free of charge once a year and provides information about all processes in the directory. If it can be deduced from this that there are no entries, the suitable credit can be selected.
But beware: Do not ask too many requests, because this could worsen the credit rating.
2. Prepare income surplus invoice and tax assessment
It is important for a bank to know the exact financial circumstances of a self-employed person. It is therefore essential that the tax returns of the past three years are presented. In addition, a current income surplus bill should not be missing, which was preferably created by a tax accountant. This makes the information more reliable and a loan is awarded faster.
It is important that in the current fiscal year, the revenue was never in the red, so a constant plus was achieved. If this is the case then the likelihood of default of the loan is reduced for the bank.
3. Show balance sheet
In some cases it may become necessary to balance. This means that not only are all expenditures offset against revenue, but also revenue is broken down exactly for each month and every year. This gives a much deeper insight into the finances and causes banks to lend faster if the numbers look good. In such a case, it is absolutely necessary to consult a tax accountant or a professional accountant.
Only this can ensure that all information is correct. Incidentally, such an approach is recommended for self-employed with several employees anyway, because this usually also wage and labor costs incurred, which must be taken into account.
4. Use credit intermediaries
A credit broker can also be turned on to get a loan for the car faster. Most of the money then comes from abroad, because the banks there, the income is sufficient, it is neither checked the credit bureau nor collateral is required. In addition, if positive values show up on the tax assessments, then nothing stands in the way of a quick award.
However, it should be borne in mind that, if income is low, at least small amounts of collateral must be available. In addition, the increased interest rate should not be lost sight of, because a car loan for the self-employed is also a risk loan.
5. Choose the right loan
If all documents are available, then you should choose the right car loan for his circumstances. Should it only be a used car, then should be resorted to a favorable offer from a bank. Financing through the dealer can be associated with additional costs, as this usually still suggests a corresponding percentage of profit margin.
In a new car financed usually the in-house bank of the manufacturer. Here, there are quite favorable conditions, but the credit rating usually has to be perfect. In addition, exactly the interest rate should be kept in mind, because a car loan is a long-term loan. Especially for the self-employed is here again pitched to better cover the risk of failure. Therefore, it is important to compare the conditions of the banks in advance.