If you're self-employed, finding financing for your car can be more difficult than if you have a steady job with an employer who can cover part of the cost of your vehicle. However, you can get around that, and it all comes down to knowing which type of car loan works best in your situation.
Can You Get an Auto Loan if You're Self-Employed?
The short answer is yes. It all depends on your credit score and income. If you have both in order, it can help you buy a car quicker.
The Different Types of Car Loans
There are three types of car loans to consider if you're self-employed: personal, unsecured, and secured auto loans. You have to decide which one will fit into your lifestyle best.
Unsecured auto loans are personal and don't require collateral to secure your loan. Secured car loans secure your loan by using a vehicle you already own. If you have bad credit, you might have trouble getting financing from a bank or financial institution. That's why an unsecured loan may be your best bet for securing financing for a new or used car.
Auto Loan Refinance Rates
Compare auto loan refinance rates with Lantern. Lantern gives you access to virtually all of your loan information at once so that you can make an informed decision. Lantern compares rates from multiple lenders, saving you time and effort with each application.
If a car or truck is integral to your business, then it makes sense to shop around and compare auto loan refinance rates before deciding whether or not to apply. The process will take only about five minutes of your time and reveal competitive rates that could save you money.
Requirements You Need Before Applying for an Auto Loan
You can buy any car regardless of your financial situation. There are loans available for people with all sorts of credit situations to buy their own cars. You can also use cash to buy a car or barter your way into a vehicle that you want. Whatever means you use, making sure that you have enough money to pay for car expenses is critical before buying any new vehicles.
Should You Apply Even Though You Have Bad Credit But Are Self-Employed?
The answer is it depends. If you have bad credit, it's very difficult to get approved. If you have good credit, it becomes easier. However, what if you can't provide documentation of your income? Should you even bother applying? The answer depends on your situation.
There are lenders who give out loans to self-employed individuals without income statements. However, they generally require collateral to secure their investment which is why we advise applying with bad credit and no collateral only as a last resort. One of the major differences between financing and leasing is that financing comes with monthly payments instead of just one lump sum payment at purchase.
Taking Out an Auto Loan on Your Own
According to Lantern by SoFi, "Many financial institutions are reluctant to give loans to self-employed individuals, and those that do will often charge them higher interest rates." Lenders may see freelancers who work on commission as more of a risk due to their unpredictable income stream. Your ultimate decision may depend on whether or not you'll be able to secure financing from another source.
Whether self-employed or not, finding an auto loan isn't always easy. To find auto loan rates that won't bleed you dry, you have to do thorough research.