Going self-employed is many people’s dream – working for yourself, responsible for your own success and reaping the rewards.


Self-employment has grown in popularity, partially driven by changes in the economic climate and helped along by the digital revolution. Figures show that self-employment in the UK increased from 3.8 million in 2008 to 4.6 million in 2015.


Self-employment can raise concerns around obtaining credit and at My Car Credit we’re often asked the question: “I am self-employed, can I still get car finance?”


We take you through the in’s and out’s of getting car finance as a self-employed person.



So, can I get car finance?


Whilst it can involve more in proving your income, which can be more difficult for a self-employed person, the short and positive answer is “YES, you can get car finance!”



What will you need from me?


Finance lenders, who we will approach on your behalf, may be looking for proof of a steady, regular income.


Dependent on your credit score, the lender may want to see your income on paper in order to assess your credit criteria as they’ll still want to check that you can keep up with monthly repayments.


Those customers with lower credit scores may be required to produce three month’s bank statements or payslips to prove their income.


To work out your average income, lenders will total the income in the last three month’s bank statements and divide by three. This then allows them to get a credit limit based on your proof of income.


Cash-in-hand cannot be used as a proof of income. Monies received must go into a UK bank account in yours or your spouse or partner’s name. If it’s in your spouse or partner’s name, they will need to be added to the finance application also.


Most finance companies will not accept tax returns as proof of income.


Finally, the lender will need to see a minimum of three year’s employment history, three year’s address history, and you’ll need to have been a UK resident for a minimum of five years.


Lenders are looking for evidence of stability in employment and address history – the longer you have been at your current job and address, the better!


All of that said, be as honest as possible. You shouldn’t attempt to overstate your income in the hope that it’ll increase your chances of being approved or get you a better rate. Finance lenders could see this as fraud, which would have serious implications.



Can I apply on behalf of my business?


Yes, you can but you’ll need to have been trading for a minimum of two years. You’ll need to decide whether the car being financed will be for business use and the business type is important.


As an example, some finance lenders won’t finance a car for self-employed taxi drivers as they would be using the car much more frequently and adding more mileage than normal. This affects the cars value more than if they were using it for everyday driving.



I’m struggling to show proof of income, what shall I do?


Focus on making sure your credit profile is a strong as possible, including ensuring that you’re on the electoral roll.


If you’re able to provide as much of a deposit as possible, this helps your case as it helps share the risk with the funder.


Finally, consider using a Guarantor or submitting a joint application. This lowers the risk for the lender and can increase your chances of getting accepted.



So, don’t lose heart if you’re self-employed and want a car loan –  speak to us if you need more advice about applying for car finance when you’re self-employed, we’re here to help!