Getting a car loan when you are self-employed in Canada

Posted by on Sep 15, 2022 - Archived under Bad Credit Car Loan Tips

A business owner must overcome some special challenges in order to finance the purchase of a new car.

Whether they are self-employed or not, the majority of people need loans to cover large expenses like a new automobile.

We’ll arm you with the knowledge you require to decide more wisely.

Is your company a corporation or a one-man operation?

Most business owners, particularly those who are just starting out, opt to operate as sole proprietorships.

The simplicity of the process is the first advantage of operating as a sole proprietor. To obtain an HST/QST number, all you need to do is register with the CRA.

Although it’s the simplest method, you end up paying the most amount of taxes. Less taxes may be due if you incorporate, but there is more paperwork.

We’re going to presume for the remainder of this chat that your company is a sole proprietorship.

inconsistent revenue that is challenging to prove

One of the most difficult tasks for potential lenders to complete when determining whether or not to grant you a car loan is calculating your monthly income.

Your revenue as a business owner may vary from month to month, with some months being better than others.

You can make your life simpler and increase your chances of acquiring a car loan by displaying your bank statements from the previous year.

The lender could estimate how much you make by dividing the average amount you make annually by twelve.

The prospective lender will ask to view your income tax notice of assessment to confirm that the amount of money you claim to earn is accurate and that you have no outstanding debts to the Canada Revenue Agency (CRA).

Focusing intently on your credit usage

Canadians who work for themselves frequently use their personal lines of credit and credit cards to fund their enterprises, at least initially.

This is due to the inconsistent nature of their revenue. The quickest approach to acquire some extra money is this, however, doing so could lower your credit score.

You will consume more than 30% of your available credit if you take on too much debt. Your credit score will suffer, and the amount of debt you have to pay off will increase as a result.

Before it starts to negatively impact your cash flow, you should aim to pay off this consumer debt as soon as you can.

Where entrepreneurs can find the most affordable vehicle loans

You shouldn’t waste your time searching online for the best offers if you’re an entrepreneur looking for them since you won’t.

Your best option is to work with a nearby dealership that has been in operation for a while and has assisted other local business owners in receiving vehicle loan approvals.

The dealership has a wealth of knowledge regarding how Canadian auto financing operates and which lenders will provide you with the greatest price.

The ideal bargain for you should be requested as soon as possible by calling your neighbourhood dealership if you want to save money on your future automobile buy.

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!

Let’s get in touch! 

Dixie Auto Loans