Running your own business offers a lot of advantages and perks you cannot have access to if you work for someone else, and one benefit is the ability to write off all your expenses. While this will reduce your tax liability for the year, it will also reduce the amount of income you have, and this can be a bad thing if you are trying to get a car loan. If you are self-employed and need a loan for a car, here are several things you should know.
You Will Need To Prove Your Income In Other Ways
In many cases, auto lenders can verify a person's income by viewing their income taxes or pay stubs, but this is not the case with people who are self-employed. If your taxes do not represent your actual income, due to writing off expenses, they will not help you get a loan in any way. Instead, you will need to prove your income in a different way, and one way to do this is by bringing in recent bank statements.
If your recent bank statements offer a positive view of your income, this may be all you need to qualify for a decent auto loan. You will most likely need at least three or four statements, but you may need even more than this.
You Could Use A Cosigner
If you are having trouble proving your income with your bank statements and have no other way to prove how much money you make, you could always consider using a cosigner to help you get a good loan. A cosigner is a person willing to sign a loan with you, and this person will have to be able to trust you completely in order for him or her to agree to this. If you do not make your car payments, the cosigner of your loan will be responsible for making them.
The benefit of using a cosigner is that the auto lender will base the loan on that person's credit. Because of this, you should make sure your cosigner has excellent credit before going through with this option.
Shop At The Right Place
A third option you also have to get a car loan if you are self-employed is shopping at an auto dealership that offers guaranteed approvals. Dealers that offer this are willing to give loans to anyone that applies. You may not get the best interest rate with this method, but it would guarantee that you could get a loan to buy a car.
If you are ready to buy a car and are self-employed, you may want to begin car shopping at a dealership that offers guaranteed approvals for auto financing.
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