When an entrepreneur wants to finance the purchase of a new car, he has to overcome some unique obstacles. Most people, whether they are self-employed or not, have to take out a loan to pay for large purchases like a new car.
We will provide you with the information you need to make a more informed decision.
Is your company a sole proprietorship or a company?
Most entrepreneurs, especially those just starting out, choose to be a sole proprietorship. The first benefit of being a single owner is that the process is easy.
You don’t have to do anything special besides signing up with the CRA for an HST number.
While this is the easiest way to get things done, you pay as much tax as possible. If you to incorporateyou can pay less tax, but there is more paperwork.
For the rest of this conversation, let’s assume your business is a sole proprietorship.
Calculating your monthly income is one of the hardest things for potential lenders to do when deciding whether to grant you a car loan or not.
As an entrepreneur, your income can change from month to month and some months will be better than others.
One thing you can do to make your life easier and increase your chances of getting a car loan is to show your bank statements from last year.
By taking the average amount of money you earn in a year and dividing it by twelve, the lender could get a field figure.
The prospective lender will want to see your income tax assessment notice to make sure the amount of money you say you are earning is correct and that you don’t owe money to the CRA.
Maintain a laser focus on credit usage
Self-employed Canadians tend to finance their businesses, at least initially, with their personal lines of credit and credit cards.
This is because their income is not always constant. This is the easiest way to get some extra cash, but it can hurt your credit score.
If you take on too much debt, you will use more than 30 percent of your available credit. This will damage your credit score and add to the total amount of debt you have to repay.
You should try to pay off this consumer debt as soon as possible before it starts hurting your cash flow.
Where Entrepreneurs Can Get The Best Deals On Auto Loans
If you are an entrepreneur looking for the best deals, you shouldn’t bother searching online as you won’t find any.
Your best bet is to work with a local dealership that has been around for a long time and has helped business owners like you get approved for auto loans.
The dealership knows a lot about how automobile financing in Canada works and which lenders will give you the best deal. If you want to save on your next car purchase, you should call your local dealer right away and ask for the best deal for you.
For those of you who know you have a challenging credit situation, visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for an auto loan today!
This article was published by: Jamie Kavanagh by title: What entrepreneurs need to know when buying a car in Canada
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