Car Finance for the Self Employed

Self employment liberates and enables a person to make a lot of decisions for their career; in contrast to those driven by the confines of a specific employment option. And while people may assume the financial management works the same for people belonging to both groups, it has its own share of differences.

Being self-employed and deciding on purchasing a car for yourself can be difficult, especially when browsing through the options to finance your car purchase through external sources. For once, you do not have a proof of a steady income and that is one of the fundamentals analyzed by every lender. Working as a freelancer is a lot more flexible than a regular employment option; however, that boils down to restricted car financing options.

What to do to acquire Car Finance when I am Self-Employed?

You need to have it all sorted out in terms of your financial status before you start to apply for car financing through the different options so there are no visible obstacles in getting your dream car.

a)     Keep Your Financial records Readily Available

When you apply for a loan from any financial institution to finance your car purchase, you need to provide enough information to the lender so that they can decide on sanctioning you the loan. Keep your tax returns and other important financial details available for the lending party to have a look at so your credibility and ability to pay off the loan could be gauged.

b)     Go for a High Amount of Down payment

In order to establish your credibility and get the loan you desire for your car being a self employed person, it is advisable to go for a high amount of down payment to secure the loan. This shows steadiness and commitment.

c)      Your Bank Statements

Your bank statements speak for your financial position and also give a chance to the lender to study and foresee your strength in terms of it. This helps them understand your previous practices and get to know about your credit history as well. They are essential if you are looking for car financing options, and will also determine the amount of interest you can afford.

d)     Improve your Credit ranking

Something what no one must ignore and definitely not when you are about to apply for a loan to finance your car, is to improve your credit report. If you have had some rough experiences, clear off the debts so to appear trustworthy and reliable in the sight of the lenders for the car finance. Pay your utility bills on time, and manage your finances by budgeting. Also, apply for small credit amounts and repay them as it gets due so to improve your ranking.

e)     Your Contract Information

If you think disposing your invoices and contract information makes no differences, you are gravely mistaken and need to start a habit of securing the records as soon as possible. These records help greatly when you are looking for car finance options as they help determine your financial strength you’ve gained with the self employment you’ve opted for yourself.

Make sure you leave no room for your cr4edibility and affordability to be questioned so to get the loan for your car.…

Some Impartial Car Finance Advice

If you are looking for a car finance option, you will find a long list which you can scroll through. Among the notable ones, you will find hire purchase, personal loans, personal contract hire and personal contract plan. Choosing the right one can appear to be a daunting task and looking for an unbiased advice may seem to be even more difficult. However, we are here to impart some impartial car finance advice that we hope can help you with better decision making.

If You Want to Finance with a Personal Loan

Provided you have good enough credit ratings, we would suggest that you should seriously “consider” the option of personal loan to finance your new car.

Why? What’s the advantage of opting for a personal loan?

The reason is simple: you get to own the car immediately and if something goes wrong in future, you can sell it off to cope up with any financial gaps. Furthermore, with personal loans your monthly payments may seem a bit higher but the overall amount you pay is much lesser than what you would have to pay through other car financing modes.

And is there anything else to take into account?

Yes! A personal loan for a car, although secured with the purpose of financing your car, does affect your overall credit line which may influence your chances of securing, let’s say a mortgage. Not only that, with a personal loan your lender is not at all bothered about what you would be doing with it. If a dispute arises with one of the car dealers, you will have to sort it out yourself.

This could be complicated. Let me look at other options.

My Hire Purchase Option, What About That?

Yes it may offer a comparatively lower monthly payment option than the personal loan, it is secured only against your car, offers you no mileage restriction unlike PCP or PCH and it also protects you over any dispute with the manufacturer, but it also harbor few traps.

How? This seems like the perfect option. Plus I get to lower the interest rate further by increasing the term of payment.

You do have a point. But it is important to note that more you use a car, chances are that you will have to spend more on its maintenance. You can end up paying a lot more than what you would have initially paid over a shorter length of term. And remember, you cannot sell or own that car unless you clear all your payments.

Then PCP Must Be the One!

That depends. With the lowest monthly payment amongst all modes, it has a large sting in its tail with that balloon payment. Plus you would also have to pay extra charges if you exceed on the pre-agreed mileage. However it gives you the option of switching your car if you are not pleased with what you have. And unlike PCH, you can actually choose to own the car at the end of agreement.

Some General Advice

With the specifics covered we would now like to give some general advice. Always test drive the car that you want to own. And use your credit card to make the monthly payments for your car finance as it gives you extra protection on payment. On a closing note, whichever option you decide for, remember to read the papers thoroughly and not just buy into what the dealer has to say.

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