Self-Employed Car Loans in the US
Getting a self-employed car loan is not easy. At Car Loan Cash Now we can help. Being self-employed gives you more freedom than working for someone else. When you are your own boss, you decide how to manage your time and resources to succeed in your chosen field.
We deal with a variety of financial institutions willing to work with high-risk lenders. This is regardless of whether they are using the W-2 form or are self-employed. We can get you financing for a new or a used car, and the terms of the loan won’t be unreasonable.
If you have a low credit score, you don’t have to feel like you have to agree to the first loan that comes your way. Car Loan Cash Now will match you with a lender that will provide you with a self-employed car loan with low-interest rates and a small or no down payment.
Table of Contents
- Self-Employed Car Loans in the US
- Obtaining a Self-employed Car Loan with the 1099 Form
- Bad Credit Self-Employed Car Loan
- How to Apply for a Self-Employed Car Loan
- Are Buy Here Pay Here Car Loans an Option?
- Self-Employed Car Loan with Car Loan Cash Now
Obtaining a Self-employed Car Loan with the 1099 Form
The reason a self-employed car loan is harder to get is because it’s harder to prove your income to the lender. Bad credit lenders focus on a person’s income to understand whether they will be able to repay the debt. The W-2 form is a solid proof that you are getting a regular salary.
However, if you are self-employed, there are other ways to do this. The 1099 form is a great alternative in this case. The Internal Revenue Service refers to it as ‘information returns’. The self-employed person files the 1099 tax form based on the income they receive. There are different kinds 1099 forms depending on the type of income.
Note that the 1099 form isn’t the only kind of ‘proof’ you can use to get a self-employed auto loan. You can also use your tax returns and other financial documents to prove you can make the repayments.
With no documented proof of income, getting a self-employed car loan is hard. By contacting Car Loan Cash Now we can give you more information on the options available to you. We will help you develop the most effective strategy to get you a loan despite your current circumstances.
A Self-Employed Car Loan with a 1099 Form
If you want to get a self-employed car loan using the 1099 form as a proof of income, you’ll need to make sure that the amount reported in it is enough. Otherwise, getting the financing you need will be much harder.
It’s common practice for self-employed people to report only a part of their real income. Although not legal, this is understandable as it allows you to cut down on taxes. But, there is a common minimum income requirement set by bad credit auto lenders. Your report should fit with this for you to get a loan with favorable terms.
Minimum Income Requirements for a Self-Employed Car Loan with Bad Credit
Remember, specific requirements vary from lender to lender. Don’t lose hope if you see you can’t match these specific figures now. There are many car loan options for self-employed people with a bad credit score. Not only this, Car Loan Cash Now will help you find the one that works for you.
Generally, the minimum income requirement set by subprime auto lenders is between $1,500 and $1,800 a month. Therefore, your yearly minimum net profit should be around $18,000-$21,600. As a result, you get approval with relatively easily.
However, even with this level of income obtaining a self-employed car loan can be difficult if your expenses are too high. For example, if your ‘real’ monthly income is around $3,500 but the reported amount is only $2,000, and your expenses are about $1,800, you may not be able to get a loan.
The lender will look at the difference between your reported income and expenses. This can deny you a chance of getting a good loan as your debt-to-income ratio will be too high.
Bad Credit Self-Employed Car Loan
Credit checks happen to help lenders determine whether you are reliable. This shows your credit history and whether you’ve had to pay off this kind of debt before. Financial institutions consider you high risk if your credit rating is low. With this, lenders have to take precautions to offset the risks of not getting their money back. Precautions can include high interest rates, extended loan periods, and large down payments.
Self-employed people often have a bad credit score because they haven’t had opportunities to build it up. Examples of this include students and first time buyers. Others have come across huge unpredictable expenses (an accident or illness). Bankruptcy is another issue that will ruin your credit rating. The black mark from it will stay on your report for up to a decade.
At Car Loan Cash Now we help people in these situations get a bad credit or self-employed car loan. We don’t have the extreme terms usually associated with subprime auto lenders. With the right documents that verify your income, you’ll be able to get a good loan and the car you want.
Don’t forget to include child support and other similar payments in the income report. Every detail counts when the lenders decide on the loan terms they’re going to offer you.
If you manage to get your debt-to-income ratio within reasonable limits, you’ll be able to get a loan. At Car Loan Cash Now we will get you pre-approved online so that you know your budget when you are shopping for a car.
How to Apply for a Self-Employed Car Loan
Applying for a self-employed car loan is easy if you know what you need to increase your chances of approval. It’s all a matter of preparing the relevant paperwork in advance. Having an expert handle your income forms will play a vital part when determining whether you get a self-employed car loan.
Provide Proof of Income
This includes any 1099 forms you have along with at least 2 years of your tax returns. This is the main source of problems for self-employed people getting a car loan. People often use this chance to load up their tax deductions to a point where their ported income is small. It’s a great thing for taxes, but it doesn’t look good for the prospective lenders.
At Car Loan Cash Now we work with lenders willing to take this into account and provide you with a loan regardless of this paperwork. They will examine your deductions in great detail and might count some of them as income.
If you don’t have the required 2 years of tax returns, there is a way to work around this. Some lenders might accept bank statements instead of them. However, in this case, they usually need full statements from the last 6 months. This will also put you in the high-risk category and will reflect on the loan terms.
Provide Your Proof of Residence
To get any kind of self-employed car loan, you will need to prove that you actually live at the address you stated. A current address for an account of good standing is a mandatory field in a self-employed car loan application form.
A regular utility bill will do in this case. Remember that past-due bills or a disconnection notice won’t work. In case you can’t offer a bill, some lenders may allow you to use other types of proof. For example, homeowners will be able to present their property tax documents.
Provide Your Phone Contact Information
This should be simple and you can actually use the home phone bill as a proof of residence. Note that even if you use a different document for this, lenders may need this specific bill. This allows them to be sure you are giving them the right phone number.
Lenders prefer home phone numbers, but they’re not always mandatory. As a result, you can use your mobile phone number when applying for a self-employed car loan.
Provide Mortgage Statement and/or Lease Documents
If you rent a home, you’ll have to provide a copy of your current lease with any other pertinent paperwork. Lenders also need your landlord’s contact information. Homeowners can provide their mortgage and property tax documents.
Lenders use this information to verify that you have a stable living arrangement. They want to know that it won’t get in the way of you paying off your self-employed car loan.
Provide a List of Personal References
One of the tools that subprime lenders use to protect their investment is references. They will ask you to provide a list of personal, business, and professional references (usually 8-10). The lender will contact these people in case you default on your loan.
Think the list through to avoid any issues in the future. For example, if you provide your boss’s details and then downfall on your payments, you could ruin your reputation. This will reflect on your future orders- a huge problem for a self-employed professional.
Explain the Purpose of the Vehicle
If you are looking for commercial vehicle subprime loans are not the right loan option, therefore, you should buy the car for personal use. This doesn’t mean you can’t use it for work, you just can’t declare it as a business vehicle.
Note that it will be impossible to use a bad credit car loan to buy a commercial vehicle (e.g. a refrigerated van). In this case, you might need to apply for a personal loan instead of a self-employed car loan. Consequently, you will be able to use the money to finance your business.
Are Buy Here Pay Here Car Loans an Option?
It’s true that some car dealers offer bad credit financing called ‘buy here pay here’. Firstly, this is a high-risk type of financing where lenders offer the worst terms possible. Secondly, you will have to limit your choices to the vehicles offered by the dealership you borrow from. Obtaining a loan from a traditional lender is best as you’ll get more favorable loan terms.
Self-Employed Car Loan with Car Loan Cash Now
Car Loan Cash Now offers self-employed car loans from traditional lenders. Whether you can prove your self-employed income or not, we will do our best to help you find financing. It doesn’t matter what your credit score is. We do not look into your past, we look at whether you are able to pay back a loan in the present.
We understand that everyone needs a car so we specialize in matching people with lenders who offer the best terms. We will match you with a lender willing to work with your unique circumstances. To find out more about a Car Loan Cash Now self-employed car loan get in touch with us today!