880 Walkers Line, Burlington, ON, L7N 2G2
My Garage

How to Buy a Car as a Small Business Owner

How to Buy a Car as a Small Business Owner

You're going to have to overcome a unique set of challenges if you want to buy a car as a small business owner in canada

 

The internet has lots of resources to help people who work a conventional 9-5 job, but there are not many options available for entrepreneurs, so we are going to meet that need.

 

Proof of income

 

One of the biggest challenges you are going to experience when trying to buy a car as a small business owner is proving your income.

 

Most car loan underwriters can handle applications where the borrower has a pre-determined salary; calculating the debt-to-income ratios is quite simple.

 

Self-employed borrowers do not have a predictable income; some years are better than others. What lenders will ask for is the latest income tax assessments.

 

Still, since entrepreneurs have a significant number of deductions, their total income will be lower than someone who works a conventional job. The best way to show proof of income is by printing up your bank statements for the last year.

 

These bank statements will show your total income and expenses, so the underwriter will be able to quickly determine whether you have enough income to service the loan.

 

Tougher credit scoring requirements

 

After you have met the income verification, you are still not in the clear. Since you are self-employed and most new businesses, fail during the first five years.

 

Lenders are going to take a look at your credit score, and the threshold needed to access the most competitive interest rates is in the 720 range. Borrowers who work a traditional job can get by with a 680-credit score.

 

Are you going to be using the vehicle for personal use, business, or both?

 

This is an important question because it can impact your loan options and your ability to write off the operating costs of the vehicle. Suppose you are using the car for work.

 

In that case, you might consider leasing it to write the entire lease payment off. Still, you need to speak with your tax professional for advice based on your situation.

 

If you are using the vehicle for business and personal meetings, you will need to purchase the right insurance to protect yourself; this is not something you want to cut corners on.

 

Finding lenders who are willing to work with you

 

To find lenders that are willing to work with you and give you a chance, stop trying to find them online. Instead, the best course of action is to reach out to dealerships in your community and find the one that has a track record of helping entrepreneurs just like you.

 

The dealerships will know what documents you would need to prepare to secure the car loan and which lender is going to provide you with a great car loan.

 

Another benefit of working with the dealership is helping borrowers who have credit issues; if you are experiencing any type of credit issue, the dealership can get you approved and behind the wheel of a new car.

 

You should reach out to the dealership today and start looking at what options are available to self-employed Canadians just like you.

 

We’d love to help you buy a car as a small business owner! Simply fill in the form below and we’ll get back to you ASAP.

 

Thanks for reading. Be sure to connect with us on Facebook, Twitter, Instagram, or LinkedIn to stay up to date on our latest great articles! 

 

    Contact Us

    By submitting this information, you are accepting that it may be collected, used and disclosed as described in our privacy policy.
     

     

    Categories: News

    Tags: ,