Self Employed Car Finance To Suit Your Budget

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Rates from 10.9% APR. Representative APR 19.9%

Rates from 10.9% APR. Representative APR  19.9% Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 19.9%, the monthly payment would be £182.26, with a total cost of credit of £2,748.61 and a total amount payable of £8,748.61. Car Loans UK is a broker not a lender. This is an example only, all finance subject to status. Lender fees may apply.

What Is Self Employed Car Finance?

Stepping away from the 9-5 and becoming your own boss can be immensely rewarding. There are a lot of positives about becoming self-employed: you can choose your own hours, pick the clients you want to work with, and have greater freedom. However, this lifestyle can have its downsides – when do you switch off? – and also if you need to use financial services you can come across difficulties. As with mortgages, self-employed car finance can be harder to find than for those more traditionally employed.

Most lenders, especially those offering better deals, will need three years’ worth of accounts to approve a loan. While no lender can legally guarantee a loan, there are ways around it.

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Find out how much you could borrow

Rates from 10.9% APR. Representative APR  19.9% Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 19.9%, the monthly payment would be £182.26, with a total cost of credit of £2,748.61 and a total amount payable of £8,748.61. Car Loans UK is a broker not a lender. This is an example only, all finance subject to status. Lender fees may apply.

How Does Car Finance Work?

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The Initial Deposit

This step isn’t always required. Although, placing down a deposit when completing a car finance agreement is highly recommended.

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Repayment Plans

Depending on the agreement that has been put in place for example HP, PCP & CS, your repayment plan may vary.

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Contract Completion

Upon completion of your contract, you will then have a number of different options available to you. Which we will state below.

Self-Employed Finance Questions Answered

Being self employed has never been so popular, with the Office of National Statistics reporting a record high of 5 million people in 2019 as self-employed. New technology has made it easier to work wherever and whenever it is convenient for you, fitting it around your lifestyle and other commitments. Your choice of career shouldn’t dictate whether or not you can make car ownership more affordable.

Why Is It Difficult?

Buying a car outright is expensive, so many people opt to buy a car on finance, spreading the cost of the car over more manageable monthly payments.

When you apply for a loan, every lender will review the application to see whether you have the income to meet the repayment schedule. Lenders are renowned for being risk-averse and will only lend money if they feel confident that they will receive their repayments. People who are self-employed are often seen as a riskier prospect as their income may not be as secure as those employed.

Self Employed With Bad Credit

If you have bad credit rating you may have concerns about applying for car finance or other loans. An unreliable income makes it harder to stick to a monthly repayment schedule which can have a negative impact on your credit rating, in turn making you a riskier prospect for lenders.

The interest rates and terms lenders may offer you will be determined by whether you have a deposit to put down and the amount of the deposit, plus your credit rating.

A Hire Purchase option could help you boost your credit score; you are able to spread the cost of the car across monthly repayments and by maintaining the schedule you can improve your credit score. A healthy credit rating is helpful in the long run. More information regarding bad credit car finance can be found here.

Self-Employed Car Finance: What Do You Need To Do?

Lenders are expected to behave responsibly, as set out by the Financial Conduct Authority; by ensuring the borrower can meet the repayment commitment, they are protecting the borrower and themselves from potential financial difficulty.

They will need information from you to prove you are reliable; easy to do when you are in full-time employment where you can show an employment contract, evidence of a monthly income and how long you have been in employment. When you are self-employed, it is harder to demonstrate reliability but some lenders will accept one or two years, and some will even accept three months’ of bank statements and use an average of income.

Tax returns may also be allowed, and evidence of trading may also be required. The net profit of your business after tax will be what they look at.

Choice Of Vehicle

Your choice of vehicle will be required by the lender. The choice of vehicle will make a difference to the rates you will pay and will also have an effect on the overall cost of ownership – tax, insurance, fuel, and any other upkeep requirements could cost more than other choices of cars. It’s recommended you think carefully before deciding on a particular brand of car; those with a more powerful engine may use more fuel or a vehicle with extra modifications may incur higher insurance fees.

If the vehicle is going to be used as a business vehicle, you may find some lenders will not consider agreeing on a loan. The key reason for this is that business vehicles are used more and therefore require more maintenance and upkeep than the average vehicle. The mileage is also likely to be higher. This could result in the car being worth less than the value of the loan, which is not ideal if you default on repayments. A good example of this is a driving school or taxi service.

You should also be honest about your earnings and outgoings and not try to inflate your income. Applying for a loan that is more than you can afford will mean you are likely to be declined, which could be detrimental to your credit rating.

Self Employed Car Finance: What Can You Do To Improve Your Chances Of Success?

If you have the time to get your finances in order and back on track, it’s worth taking the time to do so before making an application. There are a few other things you can do before which could improve your chances.

– Electoral Roll
If you aren’t already registered, being on the roll establishes your identity and will demonstrate to the lender that you’re settled. Living at the same address for a significant amount of time can only be in your favor.

– Check your credit rating.
There are a number ofseveral credit agencies in the UK you can use to determine your score. The credit agencies will have your name, address, whether you’re on the electoral roll, and any County Court Judgements issued against you. Plus overdrafts, loan defaults and applications you have made. It may also be worth taking the time to stop any non-essential subscriptions such as magazines, or television and joint bank accounts with people whose credit rating is poor, as this can be detrimental to your own credit score. It does not record the results of those applications, however. It is recommended you investigate any debt that you aren’t sure about, sometimes debts can be registered incorrectly.

– Outstanding debt

If possible, get all outstanding debts paid up and on schedule.

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Car Loans UK is a trading style of BMG FG (UK) LTD, a company registered in England and Wales. (Company number: 12382512, Registered Address: 4th Floor, Kingsgate, Wellington Road North, Stockport, Cheshire, SK4 1LW. We act as a credit broker and not a lender and are authorised and regulated by the Financial Conduct Authority for consumer credit FCA no.928674. Car Loans UK can introduce customers to a limited number of finance providers based on overall credit profile and we receive a commission for such introductions, this will not impact the rate you are provided. We do not charge a fee to the customer for arranging the finance. This is a fixed payment or percentage, but can vary by lender. Further information is available on request. Written quotations on request. All finance subject to terms and status Data Protection Registration No.ZA766848.

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