When you're self-employed, you may feel as if you have a tremendous amount of freedom to live your life the way that you want to. This is not to say that you have to work fewer hours, but will often have the flexibility to come and go. However, an entrepreneur may not be able to prove that they have a regular income and this can sometimes be a problem. If you're looking to get a loan so that you can buy a vehicle for either personal or business use, how can you proceed in this type of situation?
Industry Options for Entrepreneurs
Generally speaking, lenders want to do business with as many people as possible and this will include the growing army of self-employed individuals across Australia. As a consequence, the industry has come up with a solution that can permit someone who is self-employed to get a loan with less documentation. This means that if your income pattern is up and down or inconsistent, this is not necessarily the end of the world.
Questions to Ask Yourself
When considering whether to apply for this type of finance, frequently called "lo doc," you will have several factors to bear in mind.
It's not uncommon for the fees associated with the loan to be a little higher than a conventional platform. Check to see what these are and if you have to pay any upfront cash to the lender to set it all up. Look at the small print, as well, especially if you might plan to make additional payments during some busy months, to pay down the debt. Sometimes, there are fees attached.
Are you happy with the interest rate linked to the loan, bearing in mind that these tend to be somewhat higher, as well? Make sure that the advertised rate is not simply an introductory one and check also if the rate is variable or fixed.
The beauty of this loan is that lenders will not require you to prove a regular income. However, you may need to give them more details of your business activities and regular outgoings, so that they can see the general picture.
Is It Right for You?
It may seem fairly obvious to say so, but it's important to assess your bigger picture finances before requesting a lo doc car loan. Remember, the lender will not be conducting a comprehensive analysis of your cash flow and you will need to be careful. Always look at a worst-case scenario, so that you can be comfortable going forward.
Making Your Decision
If you want to get some extra advice before proceeding, have a word with a financier specialising in this type of arrangement.