Being an entrepreneur in Canada is a mixed blessing; you have the benefit of working for yourself, but when it comes to financial products and loans, you are going to face an uphill battle.
One of the biggest challenges that you will face is being able to secure a loan for the purchase of a new EV. Bear in mind that all great businesses started small; even Bill Gates was a small business owner.
Lenders are not set up to process self-employed EV car loans, at least not yet
Lenders have developed processes to streamline their operations; instead of employing a team of hundreds, automation and software have allowed the work to be conducted by a few human underwriters.
These systems are designed around the 9-5 paradigm, where borrowers work a job that pays them a salary that is roughly the same every week or two weeks.
This makes it easier to calculate the gross income and maximum debt-to-income ratio (DTI) the borrower qualifies under.
Self-employed borrowers do not fit into the 9-5 paradigm; while some lenders will not even try to work on these files, some progressive lenders will give you a shot. What the lenders will do is ask you for documentation.
- Income tax notice of assessment, you can print it up from the CRA website.
- Latest bank account statements for the last 6-12 months.
- Contracts and/or invoices from customers.
These documents help show you are bringing in a steady income from legitimate sources. With this information, the underwriter will total your income and then average it out, so they know what you bring in monthly (on average).
With this number, the lender can calculate the maximum EV car loan you can receive based on your credit score is.
You need a credit score over 650 to get a reasonable interest rate car loan, you may be able to get a loan with a score under 650, but the chances of succeeding are slim without the right help.
Where to get the best deal on a self-employed EV car loan
Don’t try to find lenders online; even if they claim to work with all credit and borrower types, these websites cannot match the level of service or results that a local dealership can provide.
When you go through the local dealership, they will know all of the lenders in Canada that provide self-employed car loans.
The same dealership will shop around on your behalf to find the lender who will issue the most competitive terms.
Even if you have credit issues, the dealership has people on staff to help overcome those challenges.
You should test-drive all of the different EVs being sold at the dealership; when you have selected the EV that you like the most, you can then move forward with the confidence of knowing the dealership secured the best deal on your behalf.
With interest rates constantly being raised by the Bank of Canada, you need to move fast if you want to lock in the best terms.
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!