How to Get Approved For Auto Loans With Bad Credit If You Are Self Employed
With more and more people being laid off these days many people are either starting their own businesses or having to go work for other companies as sub contractors. This results in 1099 income rather than W2 income when it comes time to file your taxes at the end of the year. If you are self employed and have applied for an auto loan lately you probably noticed that sub prime lenders tend to shy away when they see self employed or 1099 income on a loan application. This does not mean it is impossible to get approved it may just take a little more work on your part. These are some things you can do to increase your chances for approval.
1) Have 3 years of tax returns available- Most sub prime lenders will want to see 3 years of professionally prepared tax returns. More specifically they will want to see the schedule C of the return. This is the page that breaks down all of the money that came into the business and all of the money that went out. Whatever is left over is what they will use as your income for the year. The problem with this is that most small business owners write off everything they can to show the least amount of income as possible on the return to minimize their tax burden. If this is the case with you keep reading because the next items will show you other ways to prove your income that lenders may accept. If you did show a nice profit on the return than the lender will more than likely average your last 3 years returns and use that as your adjusted income for the application.
2) Produce monthly bank statements- Some lenders will allow you to use your last 6 to 12 months worth of personal bank statements as verification of income. They will add up all the deposits into the account and average it out to come up with a gross monthly income. Be careful here because some lenders will not count any months that show overdrafts or negative balances on the statement.
3) Letter from company you are contracted through- Some lenders will accept a letter from the business or businesses that you have been doing work for throughout the year. Have them write a letter with a breakdown of the amounts that have been paid to you since the start of the calendar year. Make sure it is typed and not handwritten. It should be on company letterhead and signed by an officer of the company.
Find out ahead of time from the dealer or lending institution you are working with what they will accept as proof of income for someone who is self employed. Take the time to gather all the documents outlined here and have copies neatly put together to show the loan officer. Having all of this together ahead of time will greatly increase your chances for approval and make the whole process go a lot smoother.
This author has over 20 years of automotive finance experience, specializing in auto loans with bad credit. You can visit http://www.autoloanswithbadcreditnow.com for other useful tips and resources. Maybe you are looking for auto loan rates, refinancing auto loans, or car loans for bad credit. This site will help you.
Article Source: http://EzineArticles.com/?expert=Scott_Stanko
1) Have 3 years of tax returns available- Most sub prime lenders will want to see 3 years of professionally prepared tax returns. More specifically they will want to see the schedule C of the return. This is the page that breaks down all of the money that came into the business and all of the money that went out. Whatever is left over is what they will use as your income for the year. The problem with this is that most small business owners write off everything they can to show the least amount of income as possible on the return to minimize their tax burden. If this is the case with you keep reading because the next items will show you other ways to prove your income that lenders may accept. If you did show a nice profit on the return than the lender will more than likely average your last 3 years returns and use that as your adjusted income for the application.
2) Produce monthly bank statements- Some lenders will allow you to use your last 6 to 12 months worth of personal bank statements as verification of income. They will add up all the deposits into the account and average it out to come up with a gross monthly income. Be careful here because some lenders will not count any months that show overdrafts or negative balances on the statement.
3) Letter from company you are contracted through- Some lenders will accept a letter from the business or businesses that you have been doing work for throughout the year. Have them write a letter with a breakdown of the amounts that have been paid to you since the start of the calendar year. Make sure it is typed and not handwritten. It should be on company letterhead and signed by an officer of the company.
Find out ahead of time from the dealer or lending institution you are working with what they will accept as proof of income for someone who is self employed. Take the time to gather all the documents outlined here and have copies neatly put together to show the loan officer. Having all of this together ahead of time will greatly increase your chances for approval and make the whole process go a lot smoother.
This author has over 20 years of automotive finance experience, specializing in auto loans with bad credit. You can visit http://www.autoloanswithbadcreditnow.com for other useful tips and resources. Maybe you are looking for auto loan rates, refinancing auto loans, or car loans for bad credit. This site will help you.
Article Source: http://EzineArticles.com/?expert=Scott_Stanko
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