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Self-Employed Car Loans

Securing vehicle finance while self-employed may seem unobtainable when lenders want to see evidence of regular income and credit history, particularly if your business is new. For those that are self-employed there is, in fact, a range of products that may suit your circumstances and cash flow.

How Do I Apply For a Self-Employed Car Loan?

Before you make an application, you will need to decide if you are going to apply on behalf of your business or as an individual.

As a business, you will need an ABN, individual tax returns for sole traders, financial statements and company tax returns for the past 2 years. As a general rule your net profit will need to be double what you are applying for. If you have not lodged any regular tax returns your car loan would then be considered a “low doc” or “no doc” loan. This type of loan is often left as the last option.

If you apply as an individual, proof of income by means of bank statements will be the most important set of documents to start your application.

You will be required to fill out and sign an application form, this can be done in person or online. Once your application has been reviewed and you have received approval in principle you may be asked to supply documentation such your ABN, company tax returns and bank statements to support your application.

Once you receive final approval, you will need to sign the finance contract which will detail information such as repayments, interest, fees and terms. Car finance approvals can happen within a day or take up to 10 days depending on the documentation required.

The lender will now fund your loan, and this could happen in several ways depending on the loan you have applied for. A secured loan means the dealer or person is paid directly for your vehicle and if it’s unsecured you will receive payment to purchase the vehicle.

We understand the challenges for self-employed people when it comes to applying for car finance, so if you are unsure on where to start, talk to one of our financial professionals for more information./

Car Loan Options For Self-Employed

A Consumer Loan or very simply put a car Loan is designed for those that would like to use the car for personal use. These loans are regulated by the National Consumer Credit Protection Act. This law safeguards consumers applying for credit, clearly detailing the lenders’ and borrowers’ obligations and rights

Low Doc Car Loans are suited to those without a regular paycheque. Self-employed, contractors, etc. As is often the case self-employed people use their cars for both personal and business use, low doc car loans cover both. These loans are considered high risk due to the acceptance of limited documentation from the applicant who has difficulty proving their income. These loans typically have higher rates and fees to offset the risk the lender takes on lending to you.

A business Loans is for those who intend on using the vehicle primarily for business purposes. Under the business loan options, you have the choice of a Chattel Mortgage, Finance Lease or Commercial Hire Purchase.

It is important to note that these loans are not covered by the National Consumer Credit Protection Act and in some instances, you may be asked to raise equity against your purchase by way of cash deposit or trade-in.

A chattel mortgage has the benefit of lower interest rates, and you are able to claim depreciation and interest back on your Business Activity Statements. This loan is very similar to an unsecured consumer loan and offers a higher degree of flexibility.

Commercial Hire Purchases and Finance Leases both retain ownership of the car until the loan is paid in full.

Interest Rates and Fees

As a self-employed person, accessing any kind of income whether that is irregular, current or past, will help a lender to evaluate your true and current financial position. Based on your personal profile loan terms will be drawn up to suit your circumstances. There are tax deduction advantages when running your own business as you can claim part of your car’s costs including the loan interest.

Call us today if you need help with the application we’ll give you valuable advice on how to improve your chances of getting car finance while self-employed.

Qualifying Criteria

Depending on the type of loan you decide on, different requirements for self-employed applicants will be required here is a list of documents to prepare::


  • Driver’s license, birth certificate or Passport
  • You may be asked for secondary forms of identification such as Bank or Utility statements.
  • Proof of income
  • Financial statements/bank statements

Business Details:

  • ABN
  • Minimum 2 years of tax returns / Notice of assessments
  • Your regular expenses and liabilities
  • Details of the Car you are purchasing
  • Car make, model, colour and year
  • Vehicle Identification Number (VIN), Registration number
  • Purchase price
  • Proof of insurance

Additional details may be required – we’ll advise if necessary.

Advice, Tips, and Considerations

Credit history is highly regarded by lenders and, if you’ve had a loan in the last 7 years, make sure your payment history is good. Previous loans that have had no defaults are always looked upon favourably.

If you have spare cash use it to increase your deposit amount. A larger deposit will reduce the loan-to-value ratio (LVR) and improve your chances of getting a car loan while self-employed.

If you own any property use this to leverage your financial position. Paying off a mortgage demonstrates that you are in good standing with your financer. You’re more likely to get a loan when they can see you have a stable credit history.

It is (usually) not possible to obtain finance when a default is recorded on your credit file, so make sure any previous debts are listed as paid. This will improve your chances of receiving an approval on your loan.

Self-Employed Car Loan FAQs

Are there alternative ways to prove my income for car finance if I’m self-employed?

Proof of income is the most important criteria for a loan application.If you’re self-employed and are unable to prove your income, it is helpful to increase your deposit as this reduces the risk for the lender. The alternative would be to use a guarantor who assumes joint responsibility to repay the debt.

Do I pay more on my loan because I am self-employed?

Firstly, make sure you are comparing a few lender options, many banks and lenders offer the same rates to self-employed individuals as they do to those that are employed. As mentioned before applicants who cannot provide proof of income are considered higher risk and are therefore offered low doc loans with higher rates and fees. The factor that determines your rates is whether or not you can provide proof to repay the loan rather than an issue of being self-employed..

What can I do extra to help myself qualify as a self-employed applicant?

Lenders want a guarantee that you can repay your loan, if they cannot verify this with proof of regular income it may be worthwhile considering a guarantor to ease their hesitation. Before making the application be prepared to check you have all the required documents in order this will also speed up the response approval time. Alternatively, you could file a joint application with another person, both parties would then be responsible for paying back the loan.

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