If you’re a self-employed Canadian looking to buy a car, these pointers can help you get the best auto loan available for your circumstances. These ideas will assist you in making a properly educated decision, whether you have excellent credit or credit troubles.
Having proof of income and enough is vital
One of the most important concerns that prospective vehicle loan lenders will ask is if you have enough income and can prove it.
The Canadian economy is experiencing profound inflationary pressures, and lenders are wary of taking on risky loans. Because auto loan companies have tightened their underwriting requirements, you’ll need the proper papers to continue the loan process.
Lenders must figure out what your average monthly income is, which is tough to do because most self-employed Canadians’ income fluctuates.
Lenders will add up your total income and divide it by the total number of months, which is usually 12. This will provide your monthly running average to the lenders.
Your income tax assessments for the last 1-2 years and bank statements are the documentation you must furnish if you want your loan to be considered.
Examining your credit report in detail
Even if your income meets the minimum underwriting standards of the lender, you must still meet the credit score criterion. You’ll need a credit score of at least 680 to get the best interest rates; a credit score of 700 will give you prime interest rates.
You can still get a car loan if your credit score is low, but you should focus on improving your score. Maintaining a low credit utilization rate and making on-time payments are the greatest ways to maintain a high credit score.
Your credit score will be high in no time at all if you follow those basic criteria.
Don’t ever use credit repair/rebuilding services that are being promoted online. There are no tricks to rebuilding your credit; these firms use dodgy tactics like submitting disputes to try and remove items from your credit report.
These work in the short term, but you are setting yourself up for headaches in the future. Stick with the best practices, and you will have a better overall experience when it comes to securing any type of credit product.
Identifying the best loan options for self-employed vehicle loans in Canada
There are online lenders that market themselves as the best sources of self-employed auto loans, but their interest rates are comparable to those offered by retail lenders.
You should go through a local dealership if you want the best terms. Wholesale interest rates are available to these dealerships, which the regular consumer does not have access to.
These dealerships have a lot of experience helping entrepreneurs like you, so you should reach out to them right now.
While it may seem paradoxical, especially given how acclimated everyone is to buying online, there is no substitute for working with a dealership in your community, one that will look you in the eye and get to know you.
The sooner you contact the dealership, the sooner you’ll be able to drive off in your new car, so call immediately and start looking through your alternatives; it’ll be the best decision you’ve ever made.
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!