Securing car finance as a newly self-employed individual in Australia can be a challenge. Lenders often view self-employed applicants as higher-risk borrowers due to the uncertainty surrounding their income. However, it is still possible to secure car finance with the right approach and a clear understanding of the requirements.
1. Challenges for New Self-Employed Borrowers
As a new self-employed person, you may not have an established financial history or stable income that traditional lenders typically rely on. Without a long track record of income, lenders might hesitate to approve your car loan application. Additionally, lenders generally expect a minimum of one or two years of trading history before approving loans for self-employed individuals. Despite these challenges, there are still ways to secure financing.
2. Tips for Getting Car Finance as a New Self-Employed Borrower
- Provide Proof of Income: Even if you don’t have the usual tax returns or financial documents, you can still show your ability to repay the loan by providing bank statements or invoices from clients. If you’ve been working in a similar industry before starting your own business, using evidence of past employment can also help prove your income stability.
- Offer a Larger Deposit: A larger deposit can lower the lender’s perceived risk, increasing your chances of loan approval. If you can afford to put down a higher deposit, lenders may offer better terms and interest rates.
- Consider Loan Terms: Opting for a shorter loan term might result in a better interest rate. It can also demonstrate your commitment to repaying the loan faster, which can be appealing to lenders.
- Maintain a Good Credit Score: A solid credit score can go a long way in securing approval for car finance. Even if you're new to self-employment, having a good credit history can make you appear more reliable to lenders.
3. Why Using a Broker Is a Smart Choice
Applying for car finance directly with a lender can be overwhelming, especially as a new self-employed individual. Using a broker can simplify the process and increase your chances of success. Brokers are experts in the field and work with a network of lenders, including those who specialize in self-employed applicants. They can help you find the best loan options based on your unique financial situation, saving you time and effort.
Brokers also have experience working with new self-employed individuals, which means they understand the specific challenges you face and can advocate for you with lenders. They may even be able to find lenders who are willing to offer car finance to people without a lengthy self-employment history.
4. Conclusion
While securing car finance as a new self-employed individual in Australia can seem challenging, it is entirely possible with the right strategies. By providing proof of income, offering a larger deposit, and maintaining a good credit score, you can improve your chances of approval. Additionally, working with a broker can streamline the process and help you secure the best car finance deal for your needs, without the hassle of applying directly to multiple lenders.
DISCLAIMER
The information provided on this website is general in nature only and has been prepared without considering your financial needs, circumstances and objectives and should NOT be construed as financial, taxation or legal advice. For more information, get in touch with our experienced partner brokers today.
