Being self-employed has plenty of perks — but getting a car loan isn't always one of them. Lenders can be more cautious with self-employed borrowers because income can be less predictable.
The good news? It's absolutely possible to get car finance when you're self-employed. You just need to know what lenders are looking for.
Why Is It Harder for Self-Employed Borrowers?
When you're an employee, lenders can easily verify your income with a payslip. Self-employed income is more complex:
- Income can vary month to month
- Tax returns might show lower income (after deductions)
- Some businesses are seasonal
- Less "proof" of ongoing employment
This doesn't mean you can't get approved — it just means lenders need more information to feel comfortable.
What Lenders Look For
1. Time in Business
Most lenders want to see at least 12-24 months of self-employment history. This shows your business is established and sustainable.
If you've been self-employed for less than a year, your options are more limited, but some lenders will consider you (often at a higher rate).
2. Consistent Income
Lenders look at your income over time. Ideally, they want to see stable or growing revenue, not wild fluctuations.
3. Good Financial Management
Your bank statements tell a story. Lenders like to see:
- Regular income deposits
- Consistent savings habits
- No overdrafts or dishonours
- Bills paid on time
4. ABN and GST Registration
Having a registered ABN (and GST registration if applicable) adds legitimacy to your business.
Documents You'll Need
Self-employed applications typically require more documentation than PAYG employees:
Standard Requirements
- ID (licence, passport)
- Last 2 years of personal and/or business tax returns
- Notice of Assessment from the ATO
- Business Activity Statements (BAS) — last 4 quarters
- 6-12 months of business bank statements
- ABN registration details
Low-Doc Options
Some lenders offer "low-doc" loans for self-employed borrowers who can't provide full financial statements. These typically require:
- An accountant's letter confirming income
- BAS statements
- Bank statements
Low-doc loans often come with higher rates, but they're a good option if your tax returns don't reflect your actual earning capacity.
Tips to Improve Your Chances
- Keep clean books — organised financials make lenders more confident
- Separate business and personal accounts — shows good financial management
- Minimise debt — pay down credit cards and other loans before applying
- Save a deposit — borrowing less reduces the lender's risk
- Don't over-claim deductions — if your taxable income is very low due to write-offs, lenders may not approve what you need
- Use a broker — they know which lenders are self-employed friendly
What If Your Tax Returns Don't Reflect Reality?
It's common for self-employed people to have "good" tax returns (low taxable income) but healthy actual income. Unfortunately, lenders often rely on what's on paper.
Options include:
- Low-doc loans — assessed on bank statements and BAS rather than tax returns
- Accountant's declaration — some lenders accept a letter from your accountant stating your true income
- Specialist lenders — some lenders focus specifically on self-employed borrowers
A Word of Caution
Never misrepresent your income on a loan application. It's fraud, and it can lead to serious consequences — including the loan being called in immediately.
The Bottom Line
Self-employed borrowers can absolutely get car finance — you just need to be prepared with the right documentation and work with a lender (or broker) who understands self-employment.
Running your own business and need a car? Get in touch and we'll help you find a lender who gets it.
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