I'm self employed. Will I get a car loan?

Posted on Thursday, January 22, 2015 - 16:26

If you’re self-employed, a micro business owner or an entrepreneur, you may feel anxious about applying for a car loan. Without a regular paycheque coming in, you fear you could be rejected by a bank or lender just because you’re going it alone.

As a business owner, you actually have many more options available to you in terms of car and vehicle finance. There is in fact a range of products that may suit your circumstances and cash flow. At Savvy, we understand the needs of self-employed workers and the frustrations they face. That’s why Savvy offers a variety of consumer loan and business loan options for the self-employed.

Consumer Loan Options

This option is for people who are using the car for personal purposes. A consumer car loan is what’s commonly referred to a “car loan.”  These loans are regulated by the National Consumer Credit Protection Act (NCCPA.) This law safeguards consumers applying for credit, clearly detailing the lenders’ and borrowers’ obligations and rights.

Before being approved, you will have to provide financial statements proving you can pay the loan back. These may include (but are not limited to) individual tax returns for sole traders and company tax returns for the past two years. They will also generally ask for bank or financial statements to assess your eligibility as well.

Business Loan Options

If you intend to use your vehicle for business purposes (over 50% of the time), you may want to consider a range of alternative loans. Choose from a Chattel Mortgage, Finance Lease or Commercial Hire Purchase. Please note these loans are NOT covered by the NCCPA.

A chattel mortgage works in a similar way to a “traditional mortgage,” and resembles an unsecured consumer car loan. You benefit from lower interest rates, more flexible terms and you can claim GST, depreciation and interest back on your Business Activity Statements (BAS.) You can also opt for balloon payments at the end of a chattel mortgage to lower your regular repayments.

Finance Leases and Commercial Hire Purchases are similar, but the financier retains ownership of the car until the loan is paid off or your lease term is up.

In some cases, you may not have to provide proof of income such as those stated above. Please note some lenders may ask you to raise equity in your intended purchase by way of cash deposit or trade-in.

We’re Savvy with Self-Employed Car Finance

Savvy Finance has access to Australia’s best lenders with the most competitive loans for the self-employed on the market.

Talk to one of our financial professionals for more information. They will guide you through the process and help determine if a consumer or business loan option is right for you. You’ll do better with Savvy on your side. 

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