For some Canadians being self-employed is a dream; for others, it is a necessity with all of the economic uncertainty being felt throughout Canada.
We are going to give you the information you need to secure a competitive car loan; as a self-employed Canadian, the challenges you will face to secure financing are considerable but not insurmountable.
Are you able to afford a new car?
Time for some tough love; with the amount of household debt in Canada rising at an unprecedented rate, you need to ask yourself whether you can afford to pay the car loan and the additional costs that come with owning a car.
Insurance and maintenance are fairly predictable, but with gas prices out of control, you will need to buy an EV or be proactive in planning your trips.
The days of jumping into your car and going for a carefree road trip are gone, at least for most of us.
If you feel confident that you can afford a new car, plan on spending nearly $1,000 per month for fuel, maintenance, and the regular monthly payment.
How’s your credit score these days?
Lenders are ultra-conservative when issuing new car loans to self-employed Canadians. It’s nothing personal against you; the lenders are just concerned about issuing loans to borrowers that have a higher than average default rate.
Statistically speaking, the number of small businesses that make it past five years of operation is few and far between.
So you can understand that the lenders want to exercise a greater degree of caution when underwriting your loan.
If your credit score is in the high 600s or low 700s, you will stand a good chance of being approved at very competitive interest rates.
Having the right documentation is key
You can make the process more conducive by having the right documentation in place. The first thing you will need is to show your income by printing up your latest income tax assessments from the CRA.
Lenders need to know how much is your gross and net income when trying to determine what is the maximum car loan you can handle.
Along with providing copies of your income tax assessments, you should compile your bank statements for the last 12 months.
This is going to give the lender a very clear picture of your financial situation and save you from having to get these documents in the future.
Where to find the best self-employed car loans in Canada
You will not be able to find these loans online or through your local bank. The best source of a self-employed car loan in Canada is with the help of your local car dealership.
These dealerships have a tremendous amount of experience working with entrepreneurs just like you and can negotiate a better deal than anything you could secure on your own.
What you should do is call your local dealership, or better yet, head on over there now and start looking over your car loan options. The dealership will be able to get you approved for a car loan before interest rates go up again.
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!