Being self-employed comes with a lot of freedom: you can set your own hours, you can choose your own projects, and literally be your own boss. However, the one thing you cannot fully control is your income which can vary from month to month. And because of this, you may think it’s impossible to secure car finance. However, that isn’t the case!  

In this guide, we’ll cover what’s involved in a self-employed car finance application, what documentation you will need for the process, and things to consider. Let’s dive in. 

Can I Get Car Finance If I’m Self-Employed?

In short, yes! If you’re self-employed, there are simple ways you can prove to finance providers that you can afford car financing.  

The process of applying for car finance is the same for full-time employees as it is for self-employed workers, however, the way you demonstrate your income will be slightly different. 

Before you apply, it’s good to understand what type of self-employment you have as you may need different documents during the process. Your self-employment type could be: 

  • Sole Trader: you are a single individual who has full responsibility for the business. 
  • Partnership: you share the responsibility of the business with more people, as well as the profits and losses. 
  • Freelancer or Contractor: you provide your services to a range of clients, often on a short-term basis. 
  • Consultant: you offer advice to clientele from project to project. 

What Documents Do I Need to Apply?

When applying for car finance, no matter the nature of your employment, lenders may need to see: 

  • Proof of income  
  • Proof of address 
  • Your credit profile 

How to Prove Self-Employed Income

Different providers will have varying methods of checking your income. If you’re self-employed and you are asked to prove your income, you may be asked to provide: 

  • Bank statements dating back 3-6 months 
  • Your CIS deduction slips 
  • Tax returns 

It’s worth noting that there are varying types of self-employments, so you will use the most relevant proof of income for your circumstances. For example, if you’re a sole trader, you’ll show personal tax returns rather than business ones. If you’re unsure about what documents you need to provide, our team can support you in the application process. 

What If I’m Self-Employed with Bad Credit?

Your credit situation is a factor in being approved for car finance as it paints a picture to providers of how reliable you are when paying off your finances. Whilst this could make your application process trickier when applying to a major bank, for example, specialists like Ucan have lenders that can be more flexible and understanding when it comes to credit – so there’s much more chance you’ll be accepted for a finance arrangement. 

To further improve your chances of securing financing you could: 

  • Put up a larger deposit: if you have the finances available to offer a larger deposit, you may be able to reduce the amount of the loan you need, which reduces the risk to the provider. 
  • Try to improve your credit: while it seems obvious, making gains on your credit can increase your chances of being improved. We’ve created this handy guide on applying for car finance with bad credit.  

Best Way to Finance a Car for Self-Employed Workers

There are many types of car financing options available in the market and finding the right one for you will depend on your specific circumstance be it income, credit history, or needs. The most popular types are: 

  • Hire Purchase (HP) or Conditional Sale (CS): this is the most common type of finance, which has fixed monthly payments and allows you to own the car outright at the end of the agreement.  
  • Personal Contract Purchase (PCP): this spreads the cost of the vehicle over a typical period of 2-4 years with the option of making a final ‘balloon payment’ if you would like to own the car. You also get the option to return the car for something else. 

Apply for Self-Employed Car Finance Today

We hope you have a better understanding of where you stand with your car financing options. Want to see what Ucan can offer you? Start your application process with a quick and simple quote.