This article reflects the current state of scientific knowledge as well as our journalistic guidelines and has been reviewed by experts.
In this article
- 1. Private or commercial vehicle financing?
- 2. Self-employed – why the car bank can refuse vehicle financing
- 3. The commercial car loan – advantages for self-employed and freelancers
- 4. documents for commercial financing
- 5. the assessment of creditworthiness in the case of self-employment – note special features!
- 6. opportunity increase for the car loan by co-applicants
- 7. Asking for terms and conditions instead of a credit inquiry for car loans
- 8. The uncommitted installment loan as an alternative
- 9. Self-employed: include leasing as an option in the comparison
As a self-employed applicant, you do not always meet with approval in credit matters at the car bank or the house bank. However, a car loan for the self-employed does not have to be an impossible task if you bear in mind a few points and make yourself aware of the different car financing options available to you. You can buy a car with private or commercial financing, use an installment loan without a specific purpose, or consider leasing as an alternative.
The independent financial market in particular offers favorable terms and a wide variety of car loans. If you are self-employed, it is often difficult to secure vehicle financing. But there are solutions, in which you deposit for example the purchased vehicle as a security and offer the lender the registration in the vehicle registration document. In this article we would like to show you how to obtain private or commercial financing and get the car loan as a self-employed person without too high interest rates.
Private or commercial vehicle financing?
Depending on whether the car is to be used for private or business purposes, private or commercial financing is the best option for purchasing a car.
Before you explicitly decide on a credit offer, you should consider whether you prefer financing via your business or privately. If the car is mostly used for business, commercial financing may be the best solution. Especially when building up a fleet of vehicles, it may be advisable to consider commercial financing and rule out a private car loan. In this case, you are not liable with your private assets, but bear the responsibility for the car loan for self-employed within the framework of the company. If commercial financing for a car or the entire fleet is on the agenda, you should not rely primarily on the car dealer.
In many cases, if you are self-employed and want to finance your business, you can obtain more favorable terms on the open financial market than from a car bank. In commercial and private vehicle financing, the 3-way car loan has proven itself and has distinguished itself as one of the most favorable financing options.
You make a down payment, repay the loan installments during the term and pay a final installment at the end of the term. this practice is similar to leasing and is offered by the car bank. To find the best solution for you, you should compare several options for a car loan for the self-employed and not be led directly by the first offer of financing.
This is important
For private car financing, the 3-way car loan has become established. In addition to the normal monthly loan installments in the specified term, there are two additional payments. A down payment at the beginning of the loan and a final installment at the end of the loan. car banks offer this type of financing, which is similar to leasing.
Self-employed – why the car bank can refuse vehicle financing
A few years ago, the occupational title of self-employed was a general exclusion criterion for a large part of the banks. This circumstance did not necessarily result from the credit rating, but was related to the higher bureaucratic expenditure. A car loan for the self-employed is not generally ruled out today. Nevertheless, a credit request can lead to the car bank refusing the vehicle financing and pointing out that your self-employed activity entails too high a risk for you.
Attention!
Self-employed persons lack the credit security of a fixed, regular income, which results in a higher risk of default for the banks. That is why it is not so easy for self-employed people to get a loan from the band.
In this case, you should use the free financial market and inform yourself about the conditions of car financing and alternative credit options. If you are turned down by the car bank, it may also be helpful to switch your focus from a personal to a commercial inquiry. If you are self-employed or freelance, you do not primarily have sufficient private collateral for the car loan. The situation is different if the collateral is provided directly by the company and you agree to provide collateral in the form of the financed vehicles in the case of a car loan for the self-employed.
The commercial car loan – advantages for self-employed and freelancers
Commercial financing offers particularly attractive opportunities if you want to apply for a car loan for the self-employed. The fact is that the interest rates are much lower than for a classic car loan for private application. However, you must keep in mind that financing as a commercial customer is linked to certain prerequisites. So you have no way to finance a private vehicle commercially and meet the lender’s conditions.
If the car is mainly used for business purposes, commercial financing is a good alternative. With a justification of why the car is needed, the car can be financed commercially and you benefit from lower interest rates than with private financing and tax advantages.
In order to obtain a car loan through your business, you should provide the lender with a plausible explanation of your needs and demonstrate the necessity of a car. If you are self-employed in trade, the construction industry or a travel business, for example, the commercial car loan is a real secret tip with savings potential. You can also save money with commercial car financing, as the interest is tax-deductible. If you finance the car loan for self-employed persons privately, however, a tax credit of the interest is not given.
documents for commercial financing
As with the classic car loan, you must also submit various documents for commercial vehicle financing. First and foremost, your creditworthiness is an indicator that determines whether or not you will be approved for a loan. With commercial auto loans, your personal creditworthiness plays a subordinate role and the liquidity of the company comes to the forefront. In combination with the explanation of why you need a vehicle for your business, submit the business accounts and the tax assessment notices for the last two to three years. The scope of necessary documents is generally based on the financing expense and can be looser if you apply for the car loan for a cheaper, used vehicle. Ask for the required documents before applying, so that you can submit all the documents for the car loan for the self-employed in full.
The evaluation of creditworthiness in the case of self-employment – pay attention to special features!
Attention!
You are self-employed, which results in a higher risk assessment than with a salaried employee. Even if they have high sales, the auto bank and other lenders value their risk more highly. It is therefore particularly important to present a plausible repayment plan and to calculate the term and the installments for the vehicle financing with a certain margin.
Your chances of obtaining a car loan for the self-employed increase if you can demonstrate good commercial liquidity and an optimal private credit rating. Since the interest rates for a car loan for the self-employed are usually higher than for financing with permanent employees, you should think about a commercial car loan and compare different options. Even as a businessman, if you are self-employed or freelance, you can increase your creditworthiness through some measures and thus ensure a more favorable interest rate.
increase in chances for the car loan through co-applicants
This is important
A second applicant has a positive effect on the conditions for the car loan. The co-applicant can be another entrepreneur, but also a person from your private environment. If you are married, you can include your spouse in the financing.
This orientation is particularly worthwhile if the second applicant is not self-employed, but is employed in a permanent position. You also have the option of securing the car loan through private property.
Whether you want this mix of personal and business depends on the situation and your business. If you are a freelancer or self-employed and run your own business, you generally benefit from private insurance when taking out a car loan for self-employed people. Even if you opt for commercial financing, the collateral can be provided via your private property, for example through a savings contract or tangible assets.
For a car loan, ask for terms instead of applying for a loan
As with all loans, you should also bear in mind with vehicle financing that too many credit inquiries have a negative impact on your credit rating. But without comparisons, you will always pay too high an interest rate. If you are interested in a car loan for the self-employed, take advantage of the opportunity to inquire about conditions. In this way, you will receive concrete offers without a credit request with insight for third parties in the schufa is stored. To make a detailed comparison, you need at least three offers from different lenders.
You can request the conditions from the car bank and compare them, for example, with a car loan for which you request the conditions from an independent financial service provider. In the comparison, you will find out which lender will finance you at a favorable interest rate and with the desired flexibility. It is also advisable to compare offers for private car loans for self-employed persons and commercial financing. In order to obtain the best offer, pay the utmost attention to comparing and evaluating offers of terms and conditions.
