Car Finance for the Self Employed

Posted on Friday, April 24, 2015 - 10:16

If you work for yourself, the banks and lenders look at you as if you’re a bigger risk. You might make a good income and enjoy the freedom of a self-employed or entrepreneur lifestyle. That comes with a drawback. Many lenders and banks will reject your car finance application just because you don’t have a regular, fixed income. But there are options out there for freelancers, contractors, self-employed business owners, full-time investors and entrepreneurs like you.

Proving income and reliability

With many car loan products, you will need to prove your income with a lot of documentation. Self-employed people usually don’t have the same level of documents that other applicants have. This means they may have to apply for a “low doc” or low documentation loan. Generally, you will need to self-certify your income by filling out an Income Declaration. You’ll also have had your ABN active for at least 12 months (some lenders require a minimum of 24 months.)

It also helps if you are a verified property owner and have good credit. If not, lenders may ask for as much as a 30% cash deposit on a car before approving your loan. They may also require you to take out comprehensive car insurance.

Chattel mortgage

Are you planning to use your vehicle for business use? If you’re driving your vehicle for more than 50% business use, a chattel mortgage is a popular solution. Chattel mortgages are great for business owners (ABN holders) because you can claim your GST, depreciation and operating costs through your Business Activity Statement.

Chattel mortgages are much like consumer loans with terms and repayments working in a similar way. You can also apply for 100% finance and add extras such as insurance. Chattel mortgages resemble secured loans. As such, they have lower interest rates. The downside is that the government does not regulate chattel mortgages in the same way as consumer loans and if you cannot make repayments, your car is up for repossession. It’s best to talk to a financial professional about the finer differences.

Talk to a financial professional

The team at Bad Credit Car Loan have years of experience finding self-employed people the best deals on car loans and chattel mortgages. We understand the needs of the self-employed. Despite being in good financial standing, getting knocked back for finance feels completely frustrating. Talk to us today about your options and gain access to Australia’s top lenders and financiers.

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