At Oodle, we offer flexible car finance options for freelancers, contractors and sole traders. With a simple application process, quick approvals and trusted service backed by real customer reviews, we’re here to help you get on the road with confidence.
Can I get car finance if I’m self-employed?
While it’s certainly possible to get car finance if you’re self-employed, the process can be a bit more time-consuming compared with being on the payroll for someone else.
You may need to provide a wider range of documents to any potential lender to demonstrate the agreement is both sustainable and affordable.
That said, because the demand for credit has grown, and so many people are self-employed in the UK today – around 4.31 million to be precise – the industry is now much better equipped at serving
this sector. Some lenders, including Oodle, gladly offer self-employed car finance as long as you satisfy their criteria.
If you work for yourself, you can apply for car finance in exactly the same way as anyone else; there may just be a few extra steps to take before you are approved. What it boils down to is being able to satisfy any potential lender that you can be relied upon to repay any car loan, despite potentially having irregular earnings.
What documents will I need to get car finance if I am self-employed?
Every lender will have their own criteria, but broadly you can expect to provide some, or all, of the following:
3-6 months’ worth of bank statements
Recent tax returns
Details of your trading accounts if you are a registered company.
How can I increase my chances of getting approved for car finance if I’m self-employed?
There are several things you can do to make yourself more attractive to lenders.
Register on the electoral roll – Firstly, make sure you are on the electoral roll. This confirms your address and identity and is a fundamental component of a good credit record.
Manage your financial stability – Make sure your finances are in order. Lenders will look at your disposable income so it’s wise to review your regular expenses - clearing outstanding debts if you are able to, or reviewing any additional expenditure like monthly subscriptions. Keep thorough, up-to-date records of your earnings and expenses, bank statements and tax returns, because these are likely to be requested during any finance application. Having organised, accessible records will help to keep any finance application as pain-free as possible.
Improve your credit score – Your credit score plays an important role in a lender’s decision regarding your car finance
application. If you’re self-employed, having a good credit score increases your chances of getting accepted for car finance. Therefore, it’s a wise idea to work on improving your credit score before applying. You can do this by consistently making on-time payments, staying within your credit limits, paying off old debts, checking for errors and reporting any mistakes. If possible, end any financial agreements (joint bank accounts for example) that you have with any third parties who have a poor credit rating, as it could impact your own score. Learn more about credit score.
Consider increasing your deposit – Saving for a larger deposit can help to increase your chances of securing finance. The more cash you can supply up front, the less risk lenders will feel they are taking, making them more likely to provide you with the funds you need. Plus, the larger the deposit, the smaller the loan you’ll need to pay off, with less interest and lower monthly repayments overall. While an unsecured loan doesn’t require a deposit, contributing a portion of the payment in cash can help reduce the total amount you need to borrow.
Types of self-employed car finance
Typically, there are a few ways to buy a car. Each option comes with its own advantages and disadvantages. The best choice for your car finance will depend on your circumstances.
Car loan
A car loan is a financing option where you borrow a lump sum of money to buy a car and repay it through monthly instalments, but you’ll own the vehicle from the start. While no upfront deposit is required, it’s important to note that the interest rate and monthly payments can be higher than with other car finance options.
Hire purchase
Hire purchase (HP) is where you make a regular monthly payment for a car with a fixed interest rate – meaning you know exactly how much you are paying every month. The deposit can be flexible or even not required at all. The car is owned by the lender until you pay the last monthly instalment and the option to purchase fee.
Personal contract purchase
Personal contract purchase (PCP) allows you to buy a car through fixed monthly instalments, like hire purchase. PCP tends to have lower monthly payments as you don't have to pay the car's total value. But should you decide to keep the car at the end of the agreement you will need to pay a substantial ‘balloon payment’ to purchase it outright.
Personal contract hire
Personal Contract Hire (PCH) is a flexible leasing option that lets you hire a car for a fixed term with manageable monthly payments and an upfront rental fee. You get full use of the vehicle during the lease, then simply return it at the end - there’s no option to buy, making it ideal if you prefer driving the latest models without long-term ownership.
Whether you need a reliable vehicle for work, looking to switch to electric, or simply want more space for your day-to-day needs, an Oodle Car Loan could help you spread the cost.
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