If your vehicle has clapped out on you with its gears obsolete, brake pads withered and the chassis rusting away and your coffers are not exactly overflowing, it’s likely you’ll need to look into the option of getting some car credit.
Alas, credit is generally hard to come by in this post-crash age, for whatever reason you’re seeking it – and it’s no easier getting it for a new set of wheels. The problem can be further compounded by bad credit ratings, which may have arisen for a number of factors. While it’s unfair for loan providers to penalise you because of financial difficulties in your past (sometimes a distant past) or even your present, it’s a sad reality that they can, and will.
Proving you’re a worthy customer can be made even more difficult if you’re self-employed. With the absence of regular weekly or monthly payments and payslips, it’s not quite as simple to prove your solvency. There’s also the problem faced by the newly self-employed, as you won’t have any tax returns to brandish to show your suitability.
But as with many things, there are ways to get car credit for bad credit as well as car credit for a peripatetic income – you just need to put a few things in order first.
Sort out any old sources of credit
This is not just a precaution – it should be a starting point, really. If You have several credit cards and some you are no longer using, ensure the account is closed; many people simply cut up the card and leave it at that. Having several credit card accounts open at once is not going to do you any favours when seeking credit for a new car.
Get a credit report and extra evidence
Whether you’re on a payroll or self-employed will matter little if a loan provider sees you’ve got a decent credit report. Get one of the 3 major credit companies (Experian, CallCredit or Equifax) to send a report to your prospective lender, who will then assess your credit possibilities from the information they’ve received. For a small fee, you can and should check the credit rating, as stories of errors appearing on them are legion. If you’re a self-employed person who has an accountant, get them to provide information on your behalf and vouch for your income and expenditure, too.
Check out different loan options
If one potential lender refuses to do business with you on the grounds of your employment status, it’s only one hurdle, and there are several options. At a bank, you’ll get good loan rates and a better understanding of your position as a self-employed person – essentially, you’ll be penalised less for it there. However, bank loans can take a while to be arranged. At a car dealership, the loan will be swifter – almost immediate – but with much higher interest for the early stages and they’ll probably be warier of your position. Then there’s the online option. You’ll find an array of good deals and rates here and your being self-employed will be questioned the least, but equally, there may be many scams, so be wary, wise and cautious when choosing a loan provider in this way – go to comparison sites and also seek out customer reviews.
If you’re earning legitimately as a self-employed person, there should be no reason for credit to be denied you.