Self-Employed Car Finance

Self-employed car finance is accessible – you’ll just face a few more checks and have to provide more documentation compared to non-self-employed workers.

With car finance for self-employed individuals, lenders will typically care about your affordability and stability, not just your payslips.

As such, if you’re searching for the best car finance for self-employed people, it’s sensible to have documents including tax returns, bank statements, proof of ID and address and an SA302 tax form from HMRC. Having these documents to hand will speed up the process of your search for car finance for self-employed individuals.

How to prove your income if you’re self-employed

As detailed above, car finance lenders will request documentation from self-employed applicants. The typical documents that you should expect to provide are:

• SA302 forms – An SA302 form is a summary of your income that shows your income, tax allowance and the tax you’ve paid or owe for each tax year. It’s a document that you can request from HMRC.
• Self-assessment tax returns – If you’re self-employed, you have to fill out a self-assessment tax return each tax year, which tells HMRC how much you owe in tax. Some car finance lenders may request these as part of your application.
• Bank statements – Bank statements can be another way of proving your income. Typically, lenders may ask for three to six months of bank statements for self-employed car finance.
• Business accounts (if applicable) – If you own a business, a lender may ask for documentation on your accounts during your application.
• Proof of ongoing contracts or invoices (for freelancers) – If you work freelance, self-employed car finance lenders will ask for proof of ongoing income.

My Car Credit will guide self-employed applicants on what documentation you’ll need for your car finance search. We’ll match you to lenders willing to work with self-employed income proof, helping you secure the most suitable agreement for your circumstances.

Common challenges with self-employed car finance

Applicants looking for the best car finance for self-employed people often face more challenges securing an agreement than salaried applicants. These obstacles will vary depending on each individual’s circumstances, but the most common include:

• Irregular income – Whether you’re a salaried or self-employed applicant, car finance lenders want proof of income. Evidence of consistency with your income will support your application. The longer and more consistent your income, the better.
• Limited or no payslips – If you lack regular payslips (or don’t have any), you may face obstacles applying for self-employed car finance, and lenders may ask for alternative proof of income.
• Higher perceived risk – If you’re a riskier applicant, lenders may offer you slightly higher rates. Alternatively, you may need to pay a deposit, or secure a guarantor.
• Bad credit – Applying for self-employed car finance with bad credit can complicate the process, but it’s not a total deal breaker. In fact, at My Car Credit, we’ve secured car finance for self-employed applicants with poor or limited credit histories.

Advice for self-employed car finance applicants

These are the easy steps you can take to improve your likelihood of acceptance for self-employed car finance:

• Prepare documentation early – We’ve listed the kinds of documents that you may need to present for an application for car finance for self-employed individuals above. If you have your SA302, tax return and bank statements readily available, this can speed up the application process.
• Save a deposit – Having a deposit for your car finance reduces lender risk and shows the seriousness of your application. As such, saving for a deposit will improve your approval chances.
• Keep credit score healthy – Having a healthy credit score by paying your bills on time, reducing your debt and minimising your overdraft reliance will improve your chances of acceptance for self-employed car finance.
• Show stability – Lenders will look at your affordability and stability if you can’t provide regular payslips. Showing consistent income, long-term contracts and repeat clients can all help to support your application.
• Work with a broker – My Car Credit can help you find lenders with a flexible approach to self-employed applicants searching for car finance.