Refinancing Your Car Loan When Self-Employed
Trying to apply for a car loan to refinance them can be a bit of an intimidating task, even more so if your self employed or retired. Usually, lenders look for income records or your W-2s from your employer to prove that you can make monthly payments, but if you are your own employer, then you unfortunately do not have such things to show that you can.
So this means it's impossible to get an auto loan while your self employed, right? Of course not! There are still plenty of options for freelancers and personal business owners to still apply and receive a car loan to refinance, especially with RateWorks, a company dedicated to helping self-employed people get car loans.
Proving you are self-sufficient by being self-employed
Most auto loan lenders will ask you for proof that you make an income high enough to lend you the cash for your loan. This can be very difficult for self-employed car buyers to get a car loan. Most even require that you have personal references, a high credit score, and deep dives into your bank account. RateWorks on the other hand makes it possible to receive a refinanced auto loan with proof of income. Here are some ways we can help you get a self-employed car loan.
A typical auto lender will require you to give them pay stubs from your place of business. This provides them the confidence that you make enough money annually to pay back your car loan. The problem is, if you are a freelance graphic designer or seller on Etsy you do not have pay stubs from a single place of business to show you have a steady income. With RateWorks, like most banks and credit unions, we do not need proof that you work at a company, just evidence that you work and make a livable wage while doing so.
All you need to do is provide them with three months worth of full bank statements or other documentation that provides verification of income as an independently employed person is making money on your own without a company's approval. Other lenders would ask for years worth of bank statements in order to prove your income is viable.
Now both a regular lender and RateWorks request self-working people to send their tax returns to verify income. The difference is that most other lenders will take your tax returns net profit or loss into consideration when handing out the auto loans, not just your gross income. They also take into consideration your deductions because having too many can reduce your apparent income. At RateWorks, we just want to see if you have taxable income, and providing your past tax return is good enough evidence that you received income from your own personal business.
At RateWorks, we just want to see if you have taxable income, and providing your past tax return is good enough evidence that you received income from your own personal business.
Other bills that prove your monthly income
If you aren't comfortable with a lender looking through your bank accounts or tax returns, then there are some alternative statements you can provide that RateWorks will accept. Things like credit score, and any other bill that they can see if you can make the payments on a monthly basis and receive self-employed car loans.
Things to keep in mind for self-employed car loans
Though trying to get refinanced auto loans is a tricky situation, RateWorks is there to help give the self-employed the confidence that they can still run their personal businesses and also get treated fairly by lenders and other financial institutions to get a self-employed car loan. RateWorks will even have a personal interview with you and provide you with a lender you can trust.
Other things to keep in mind when applying for a car loan, regardless of employment status, is that you typically want a good credit score, having bad credit can lead to lenders becoming more hesitant to give an auto loan to you. Making on-time payments for other bills and loans will also give them confidence that you are able to pay your bills. Also by not making a payment, you risk losing your vehicle. Following these steps will help you qualify to be approved and get a car loan easier, even with self-employment income.