More than 90 percent of all private new car sales and up to half of all private used car sales are acquired on some kind of finance arrangement these days.
Certain forms of car finance, such as hire buy, contract transfer, and lease purchase, also exist. The car finance deal you will be offered will depend on a range of factors including the price and age of the car, its mileage, loan term and the deposit you want to pay, as well as your circumstances.
To make an application for car finance you must be at least 18 years old or over. This applies to all other types of credit applications. Age is an important factor in the finance agreement as lenders have to be responsible and ensure that their customer is of an age where they fully understand their responsibilities within the finance agreement.
You must be at least 18 years old or over to qualify for car finance. It corresponds to all other credit applications. Age is a very important factor in the lending arrangement because borrowers have to be careful to ensure that their customers fully understand their obligations under the loan agreement.
UK residents living in the country for less than 3 years are uncertain to be eligible for car finance. Lenders place a high degree of importance on the area in which a borrower has been residing to ensure that they can trace the buyer to a new location if anything goes wrong with the lending arrangement payments
For the finance application, the creditors will want to ensure that the person they lend the money to will be able to repay the car loan as stated in the financing plan and that having a regular income is a big part of that. it is impossible to get guaranteed car finance, but there is a lot you can do to help your application.
Buying a car as self-employed
According to the Office for National Statistics, the number of self-employed workers in the UK has increased since 2000 and hit a record high of almost 5 million in March 2019-equivalent to 15.5 percent of the workforce employed.
The fact is that self-employment is now much more common-with many people actively opting to take the plunge-and while there are benefits of becoming their own boss other parts of life may also become more complicated. One of these is applying for car finance. There are however ways to secure capital.
Car finance, for those who are self-employed and who are looking to buy a car often finds that a lack of three years of updated accounts can keep them from getting a good deal or they can’t get funding at all.
You are still eligible for car financing even if you are self-employed. It shouldn’t have any effect on the decision. Or, at least, it will not be a reason why you were refused car finance application.
Why is it more difficult to get vehicle finance for the self-employed?
Well, you’d be mistaken, most lenders do not prefer loaning money to self-employed people; perhaps it’s the risk, perhaps it’s the experience from other self-employed people running away from owed thousands of money.
Not producing a stable monthly income will make it more difficult to make payments on time that can impact the credit score, and lenders are often wary about granting loans to someone without a guaranteed regular income.
How To Get Approved For A Car Loan Without A Job/Income?
Spring clean your credit
It is also worth checking the accuracy of the data on your credit report with the three major credit reference organizations before you do anything. These credit reference offices help determine how quickly people can access credit.
The most important thing you can do is keeping your credit score on top. Many things affect your credit score. If you have skipped interest payments in the past, declared bankrupt or made late payments on your accounts, your credit history will be adversely affected.
Always check your file for mistakes, contradictions, misunderstandings and other errors that could downgrade your credit score. If you see anything wrong, contact the information office immediately and if it agrees with your argument, it will have to update your paper.
It is a good practice to refrain from sending too many applications for loans at once, every time an application is denied. This is reported on your credit profile, making it harder for you to secure a loan again.
Get your finances straight
You should be able to establish that you have a steady income with bank statements for better chances of getting self-employed car financing. An excellent credit score won’t always be enough to ensure that you’re eligible for self-employed car finance.
Tax returns should also be sufficient for finance purposes.
These also reveal your financial history, and as long as you haven’t regularly spent more than you earn, these could help you secure car finance. Most lenders are expected to set a borrowing limit of around 25 percent of your monthly net income.
For companies younger than 6 months, proof of earnings before the establishment of the company may be needed
Get on the electoral roll
It’s always a good idea to find out why your loan has been rejected and what credit agency the lender used if you’ve been denied car finance. This would be useful to know as it can define the steps you need to take to address the situation, such as registering on the electoral roll.
To be on the electoral register is one of those moves which is something that should be told towards anyone who tries to get car finance and some other financial arrangements.
Being included on the electoral register can help boost your credit score because it helps any interested party to ensure that you are who you say you are and that the documents you have received are correct.
You can register online at www.gov.uk/register-to-vote if you live in England, Scotland or Wales.
You may join for the electoral roll online in about five minutes, or you may also register by post.
Provide your latest trading accounts
Where there is a need for proof of trading performance, the net profit after tax of the company will be needed, a statistic that should be at least twice the sum you are trying to loan.
Some borrowers, though, will cap what they offer you up to 25 percent of your monthly net income
When a company hasn’t traded long enough to produce substantial accounts, bank statements can also be seen as proof of income and expenses.
Search used car deals under 200- 300 pounds per month
Cars will almost always offer a better value of choice on the used market than a brand new replacement.
Between sporty hatchbacks to large SUVs: you will find the perfect used car between the range of 200-300 pounds a month.
Find financing offers from dealers and private sellers near you, for popular brands.
Compared with a brand new car, owning a used car can save you lots of cash. You have plenty of options in the second-hand market.
Propose a guarantor or submit a joint application
If you still have trouble being approved for financing as a self-employed person, another option to consider is the guarantor finance.
Guarantor car finance can be ideal for people with less than excellent credit history or somehow having difficulty getting financial loan approval.
As you will be taking out a guarantor car finance, it is important to be aware that the person who acts as the guarantor will be responsible for making the payments if you can’t fulfill your obligation.
A guarantor car loan works similarly as most other types of lending, but there is a third party involved in this case who assumes full responsibility for your debt. Essentially, they promise it will be reimbursed.
Being self-employed with bad credit
Being self-employed, taking out a loan could be tougher, especially if you have bad credit.
Note, if you’ve got bad debts from county court decisions, penalties, arrears, prior bankruptcy, IVA or payment plans, this does not stop you from getting your new car.
If you have a poor credit score, or even no credit at all, a car financing deal can be challenging to get approved. You do have some choices, though. Some specialized creditors are providing loans to people with bad credit.
Bad credit car finance is a form of loan offered to those with a bad credit background and unable to borrow somewhere else. Car finance encompasses three different forms of finance products: Hire Purchase, Personal Contract Purchase, and Personal Loans.
Be realistic and truthful
There are various types of self-employed status, and the best way to prove your earnings can vary depending on the category in which you fall.
But don’t ever overestimate your profits and provide extensive knowledge of your living expenses. More than anything, do not apply for a loan that is completely beyond your reach because it demonstrates financial naivety and you can expect to be rejected, which could put a derogatory mark on your credit history, making it more difficult to obtain loans in future.