Can Self-Employed People Get Car Finance?
Yes. The banks finance cars for sole traders, freelancers, contractors and business owners every day. The difference is how you prove your income.
A salaried person hands over a payslip, and the bank can see the same figure every month. You hand over bank statements and financial statements, and the bank has to work the figure out. The clearer you make that, the easier the decision.
Applying directly to one bank is often harder for a self-employed person. Carfin sends one application to the top banks at the same time, and a consultant presents your income so each bank can read it. One bank may accept a profile that another turns down.
What Do Banks Look At When You Are Self-Employed?
Every bank has its own model, but they all ask the same questions:
- How much do you really earn? The bank looks at what is left after business costs, not your turnover.
- Is it steady? Regular deposits month after month read better than a few large, irregular payments.
- Can you afford the instalment? The National Credit Act requires an affordability assessment. The bank sets your income against your living costs and the debt you already pay.
- How do you handle credit? The bank reads your whole credit record: how you pay your accounts, any arrears, and any judgments or defaults.
- The car and the deal. The price, your deposit, the term and any balloon all change the risk the bank is taking.
The credit score guide explains how the banks read your credit record.
Documents You Need for Self-Employed Car Finance
Here is what a self-employed applicant sends, next to what a salaried applicant sends:
| Document | Salaried | Self-employed |
|---|---|---|
| South African ID | A clear copy of your ID book or smart ID card | A clear copy of your ID book or smart ID card |
| Proof of address | Not older than 3 months | Not older than 3 months |
| Driver's licence | A valid licence for the vehicle | A valid licence for the vehicle |
| Bank statements | Your last 3 months of bank statements | Your last 6 months of personal and business bank statements |
| Proof of income | Your latest 3 months of payslips | Your latest annual financial statements, or a letter from your accountant confirming your income |
Your consultant confirms the list for your application. A bank sometimes asks for something extra, such as personal bank statements if you pay yourself from the business account.
Self-employed?
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Sole Trader or Company: Whose Name Goes on the Finance?
How your business is set up decides whose income the bank reads and whose name the car is in.
Sole trader (sole proprietor)
You and the business are the same person in law. The car is financed in your name, and the bank treats the business income as your income. Your business bank statements and your financial statements or accountant's letter are your proof of income.
Company, (Pty) Ltd
The company is a separate legal person. You can finance in your own name on what the company pays you, or the company can finance the vehicle in its own name. A company application uses the company's documents, such as its CIPC registration and its financial statements.
Financing in the company's name is business vehicle finance. The tax treatment differs between the two, so speak to your accountant before you decide.
Tips for Self-Employed Car Finance Applicants
None of these is a trick. Each one makes your income easier for a bank to see.
- Keep a separate business bank account, so business and personal money do not mix
- Run your income through the bank. Cash that never reaches the account cannot be counted
- Pay yourself a regular amount each month, rather than drawing money at random
- Keep your financial statements up to date, and ask your accountant for a letter before you apply
- Be ready to explain any large one-off deposit or payment on your statements
- Pay every account on time in the months before you apply
- Save a deposit. It lowers the amount the bank has to approve
- Choose an instalment that still works in a slow month, not only in a good one
One application, one enquiry
Applying to several banks yourself puts several credit enquiries on your record. Carfin sends one application to the top banks at the same time, with one credit enquiry. The quick check before it is a soft check with no effect on your score.
Try a few prices and terms in the car finance calculator to find an instalment that fits your quieter months.
