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Car Loans as a Self Employed Person or Contractor

Car Loans as a Self Employed Person or Contractor

Being self employed offers freedom but also offers challenges. One such challenge is being able to access finance. In particular loans and mortgages. Today, we’re going to discuss car loans as a self employed person or a contractor.

 

We asked our Puslinch auto loans team to outline how to go about getting a car loan when you’re self employed or a contractor.

 

Auto loans for contractors or the self employed

 

Self employment in Canada has surged over the past decade and shows no sign of slowing down. Enabled by technology, the internet and a wider appreciation for self employed, freelancers or small businesses, alternative methods of employment are a growth industry in themselves.

 

Your main challenges as a self employed person are:

 

  1. Proving your income
  2. Demonstrating sustainable income
  3. Saving for a down payment

 

Proving your income

 

Proving your income can be easy or tough depending on your industry and how you work. For those who work for a single large client or work within long term independent contracts, proving income is simple.

 

For others, like contractors and freelancers who work for dozens, or hundreds of people, it can be more of a challenge.

 

We would recommend using an accountant for the first couple of years. It makes tax time much less stressful, enables you to maximize tax allowances and will help when it comes time for the loan.

 

Accountant-prepared taxes and even a letter outlining your profit and overall income from your accountant can help.

 

Demonstrating sustainable income

 

Aside from how much you earn, qualifying for an auto loan also requires sustainable income. That means earning enough over the year to make all loan payments as well as your daily expenses.

 

If you work on a single contract, that’s easy. If you’re a contractor or freelancer, that isn’t so easy. You will have to demonstrate through using your history.

 

The more years you have been self employed and had sufficient income throughout the year to make all your payments, the better.

 

Saving for a down payment

 

It can be tough going it alone. Tough enough that you may be able to make all your payments but have little left over to save. Down payments are essential for Puslinch auto loans and can be hard to come by.

 

There is no magic answer here apart from setting money aside each month for that down payment. Even if it’s $20-50 a month, every little helps.

 

Puslinch auto loans

 

If you have been in business for a couple of years and can demonstrate a steady income, we can help secure you an auto loan.

 

We’ll need your last couple of tax returns, 3-6 months business bank statements and all contract paperwork or agreements you have for work going forward.

 

While that last isn’t essential, it can help a lending decision in some situations so it’s better to have it than not.

 

If you’re self employed, a freelancer, contractor or something else, as long as you can afford the loan, we can get you one.

 

If you need help or advice on anything to do with auto loans in Puslinch, contact Car Nation Canada today, we can help!

 

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