If you need a Waterloo car loan as an entrepreneur, these suggestions are going to help you save money.
Auto loan providers have started to adapt their underwriting processes to include self-employed borrowers, but there is some additional legwork you will need to perform before you can drive home in a new car.
How long have you been self-employed?
Generally speaking, lenders want self-employed borrowers to have at least two (2) years of activity before applying for a Waterloo car loan as an entrepreneur.
This does not mean you will not be approved; it just adds a layer of complexity that you can live without.
If you do not have at least two years of activity, the prospective lender is going to ask for your latest income tax assessment; you can print that up from the CRA.
With your income tax assessment, be prepared to supply your banking statements for the last year and also contracts you may have in place with current customers.
These contracts, combined with your banking statements, will show that your business is legitimate and that the income has a degree of predictability.
Lenders need to determine how much money you are going to generate monthly so that they can calculate your maximum debt-to-income (DTI) ratio.
The majority of lenders will not issue a car loan if your DTI is more than forty (40%) percent.
Taking a detailed look at your credit
Once prospective lenders are able to calculate your income, the next thing they will focus on is your credit score.
To get the best interest rates on a new car loan, you need a 720-credit score but preferably higher: the higher your score, the less interest you will pay.
Most self-employed Canadians put their business expenses on their personal credit card.
While this is convenient, it will drive up your overall credit utilization and bring down your credit score.
This is why you should make it a top priority to set up a separate business account and run all of your transactions through that account.
Even if you have good credit and a stable income, some car loan providers will not be willing to give you a great deal as a self-employed borrower.
There are options available, but you will need to pay close attention to these suggestions.
Where to get the most competitive self-employed car loans in Waterloo
Your best option is to go through a local car dealership that works with self-employed Ontarians just like you.
The dealership is going to take their time understanding your business, so they can pick the lenders that are going to provide you with the best terms.
These added steps may seem like a hassle, but they will be worth the effort when you get behind the wheel of a new car.
There is a shortage of new and used cars throughout Canada; you will need to move fast if you want to get the car you want at a price you can live with.
Now that you know how to secure a Waterloo car loan as an entrepreneur, you should contact the dealership today.
Fill in the form below to get approved for a Waterloo car loan as an entrepreneur! we have a team of credit specialists ready to help you buy a car suited to your needs and will work with you no matter your credit score.
For any questions or concerns, please don’t hesitate to contact us here!