Borrowing money can be difficult when you are self-employed. Today we are going to tackle the challenges that you will experience and how to overcome them.
Our Beamsville auto loans team has lots of experience helping the self-employed find car loans, so they share some insight into the process.
Entrepreneurship is alive and well in Canada
The pandemic has caused a seismic shift in the economy and has forced Canadians to think outside the box.
With a growing number of Canadians working more than one job and freelancing on the side, the way that lenders underwrite car loans will need to adapt to this new normal.
Challenging the current lending paradigm
Lenders who underwrite car loans use an old-school method of determining whether to approve a loan in Beamsville, they look for individuals who work one job and have predictable income.
That model worked great a decade ago but things have changed.
The days of working for one company your entire life has gone the way of the dinosaur, we now live in a gig economy and lenders need to consider all sources of income.
When you are trying to get approved for a self-employed car loan in Beamsville, you will need to bring the following documents.
Latest income tax notice of assessments for at least 2 and preferably 3 years. (you need to show that you do not owe the CRA any money, if you have outstanding debts to the Government, your odds of getting the loan approved are slim to none).
You will need to bring along your banking statements, best to print up your statements for the last year. The lender will be able to see all of the cash coming into the account and use it to calculate your average monthly take-home pay.
Having a good credit score
Lenders are being overly cautious and since you are classified as self-employed, the lender needs added peace of mind so the credit score requirement for a self-employed borrower maybe 700 while someone who is salaried could get by with a 680.
Whether it is right or wrong is up for debate, you should do everything in your power to get your credit score over 700.
If your credit is under 700, there is still hope so do not get discouraged but you will need help.
Finding the right auto loan advisor
Instead of spending an inordinate amount of time reading articles online, you should talk to an auto loan advisor at your local car dealership. These experts are fully versed in credit repair and auto loan underwriting.
The experts at the dealership will start by looking at your credit report and let you know how you can increase your score.
They will also find lenders that work with self-employed borrowers. You can take solace in knowing there are professional resources available to you at no cost, and you will have access to preferential interest rates by simply working with these local dealerships.
Given all of the benefits of using a dealership, your next move should be to schedule a meeting and explore your options. You will be very pleased with the loans the dealership can secure on your behalf.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!