Can I Get Car Finance If I’m Self-Employed?


Yes, you can still be accepted for a car finance loan even if you are self-employed. There are some details you will need to provide to ensure the lender that you are capable of repaying the loan.


Why is it more difficult to get car finance if I’m self-employed?

Businessman checking his accounts with car keys on the desk

Lenders can be cautious about offering car finance to individuals whose income is less predictable. 

People who aren’t self-employed tend to have a contract whereby their monthly salary is predictable, and therefore lenders can easily assess whether or not that person will be able to make the repayments. It is more difficult assessing self-employed workers as there is no contract and often income varies considerably month on month.

Thankfully, rises in the number of self-employed people and their demand for credit means that finance providers have become increasingly willing to lend to those who work for themselves.


What do I need to provide to get a loan?


To be approved for car finance as a self-employed worker there are some things the finance provider will want to see in order to assess your ability to repay the loan. 

In most cases, the finance provider will ask to see your latest trading accounts. Previously, three years worth of accounts would have been required but providers are becoming less stringent and will often accept two or even one year in some cases.

If your business has been running for less than 12 months you may have to show recent bank statements. This is considered as proof of earnings and expenditure if you are unable to provide trading accounts. Three months of bank statements is likely to suffice with most finance providers – but all providers are different and it is worth checking with the provider beforehand. 


Is there a limit to how much I can borrow?

Business man using a credit card while driving

There is no strict limit on how much you can borrow – but often lenders will set a borrowing limit of around 25% of your net monthly income. So if you earn a net amount of £2,000 per month, you will likely be limited to borrowing roughly £500 per month.

If you have your heart set on a certain car that is a little out of your budget, you can always try to put down a larger initial deposit to reduce the monthly payments.


What can I do to increase the chances of being accepted?


If you are concerned about not being accepted for car finance, there are some things you can do to increase your chances of being accepted.


Make sure credit details are accurate


It’s such a simple fix, but it can be the difference between being accepted and being declined finance. If your details are incorrect it may make you less likely to be approved for a loan. So going over your credit report and ensuring all details are correct and amending them where necessary only stands to improve your chances of being accepted for credit.


Repay any debts


Your credit report will show details of any outstanding payments you owe. So when applying for car finance try to make sure all of your payments are made and up to date. This shows the lenders that you are reliable at making repayments and will increase the likelihood of your case being accepted.


Get on the electoral roll


Registering yourself to vote is an easy way of verifying your identity and address – two factors that finance providers will look at when assessing your application. It is an easy way to increase your chances of getting car finance so is well worth doing.


 Have a settled address

A car outside a home about to enter the gates

This is of course not something you can control on a moment’s notice, but it is worth remembering that having a settled address will boost your case. It isn’t a crucial factor but moving addresses regularly will likely lead to a few questions from finance providers.


Put down a larger deposit


As we briefly mentioned, putting down a larger deposit is likely to increase your chances of being approved. The higher your deposit, the lower your monthly payments and ultimately, your loan value – and lenders are more likely to approve a smaller loan.


Be realistic


Sticking to a reasonable loan amount based on your earnings is ultimately a key factor in a lender approving your loan. 

If you are trying to finance a £100,000 Porsche while earning £2,000 per month, you won’t be accepted. Being more realistic and financing a £30,000 Mercedes-Benz is much more likely to be accepted.


What if I have bad credit?


You can still finance a car if you have a bad credit rating. However, finance providers will be more cautious about lending you money as you pose a greater risk for them – and will likely offset that risk by increasing your interest rate. This means that you will ultimately pay more to loan the money.

If your credit rating is too bad, you may find it difficult to get approved for car finance, and will need to improve your credit score before being accepted.


Which car finance option is best for me?


If you’re self-employed, you still have the same choice of options when it comes to which type of car finance you want to take out. Personal Contract Purchase (PCP), Hire Purchase (HP), and leasing (PCH) are all available for people that work for themselves.

The three methods of financing differ slightly so working out which is best for you will depend on your budget and intentions. Read our other useful guides for more information on the differences between PCP, HP and leasing.

Moneyshake offers business lease deals for companies to take out in its name and allow their employees to drive. Business lease deals work out cheaper than personal leasing because you can claim back up to 100% VAT on them. So if you are self-employed and looking to finance your next car – check out Moneyshake business lease deals.


Opting out of your work car? Moneyshake finds you the best business car lease deals, simplifying your search for a brand-new vehicle.


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For more information on car finance and leasing, check out our handy guides.

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