Car finance proof of income self employed
Discussion
Hello,
I have been offered a great deal on a car and decided to buy it. I have been accepted for finance but the finance company are asking for lots of information. Maybe finance companies are getting stricter due to world economy.
The finance company wanted a letter from accountant, two years tax returns and years company accounts. I have never been asked this before.
Why do they want tax returns? Why do they want company accounts? Can they not search for this information themselves on Companies House? I am worried that my accounts etc will show I can’t afford the car when I know I can. My income can vary.
I hope everyone is well.
I have been offered a great deal on a car and decided to buy it. I have been accepted for finance but the finance company are asking for lots of information. Maybe finance companies are getting stricter due to world economy.
The finance company wanted a letter from accountant, two years tax returns and years company accounts. I have never been asked this before.
Why do they want tax returns? Why do they want company accounts? Can they not search for this information themselves on Companies House? I am worried that my accounts etc will show I can’t afford the car when I know I can. My income can vary.
I hope everyone is well.
Jumpingjackflash said:
Why do they want tax returns? Why do they want company accounts? Can they not search for this information themselves on Companies House? I am worried that my accounts etc will show I can’t afford the car when I know I can. My income can vary.
You’ve answered your own question, they want to see proof that you can afford it. You may feel you can but they are the ones who are taking the risk.If you’re a sole trader your tax returns aren’t available to view.
The accounts filed at Companies House will not be of sufficient detail for their purposes.
And by the way, you are NOT self employed. You are obviously running a business through a limited company. That is legally a completely different situation and these things matter for both tax and finance matters.
First of all, who is buying/leasing the vehicle, you personally or the limited company. That matters a lot to the finance company.
If it is the company, then they are fully entitled to see company accounts and you would be silly not to provide them. If you have not been using an accountant to prepare them, you have just encountered one of the reasons why you should. Third parties will put more credibility on a set of limited company accounts that have been prepared by a qualified, professional accountant.
If you are acquiring the vehicle in a personal capacity, then they should not really need to see company accounts at all. What they would be looking for is evidence of your personal income, such as P60s as evidence of salary or dividend vouchers to support dividend amounts you have received from your company.
Tax returns are useful as evidence of income because they show what you have revealed to HMRC. Supposedly, they should be correct although we all know that people and companies tend to want to show as low a level of profits as possible for tax purposes but this can come back and bite them if they then want to show higher level;s of profit when looking for finance. You can';t have it both ways - not legally anyway.
If the finance is for a limited company, they will want to see Corporation Tax returns. If the finance is for an individual, they will want to see personal Income Tax self assessment returns. They may want to see a bit more detail than the returns themselves show as they are very minimal when it comes to detail.
And by the way, you are NOT self employed. You are obviously running a business through a limited company. That is legally a completely different situation and these things matter for both tax and finance matters.
First of all, who is buying/leasing the vehicle, you personally or the limited company. That matters a lot to the finance company.
If it is the company, then they are fully entitled to see company accounts and you would be silly not to provide them. If you have not been using an accountant to prepare them, you have just encountered one of the reasons why you should. Third parties will put more credibility on a set of limited company accounts that have been prepared by a qualified, professional accountant.
If you are acquiring the vehicle in a personal capacity, then they should not really need to see company accounts at all. What they would be looking for is evidence of your personal income, such as P60s as evidence of salary or dividend vouchers to support dividend amounts you have received from your company.
Tax returns are useful as evidence of income because they show what you have revealed to HMRC. Supposedly, they should be correct although we all know that people and companies tend to want to show as low a level of profits as possible for tax purposes but this can come back and bite them if they then want to show higher level;s of profit when looking for finance. You can';t have it both ways - not legally anyway.
If the finance is for a limited company, they will want to see Corporation Tax returns. If the finance is for an individual, they will want to see personal Income Tax self assessment returns. They may want to see a bit more detail than the returns themselves show as they are very minimal when it comes to detail.
Jumpingjackflash said:
I remember five years ago when I bought my home I said it was easier for my employees to get a mortgage and I am the person that pays them.
Possibly because your employees are being paid and taxed via PAYE whereas (presumably) you’re taking the minimum amount via PAYE and the rest through dividends?Jumpingjackflash said:
Thank you for the reply. The car is a personal car. It is difficult getting finance when you are self employed. I remember five years ago when I bought my home I said it was easier for my employees to get a mortgage and I am the person that pays them.
Can’t say I’ve ever had a problem. Nearly 20 years self employed and umpteen loans, PCPs, PCHs and BCHs and I’ve only every submitted numbers on the company’s own ‘can you afford it?’ numbers checker.Having said that, would have no problem supplying relevant info such as my SA return.
Jumpingjackflash said:
I have been offered a great deal on a car and decided to buy it. I have been accepted for finance but the finance company are asking for lots of information. Maybe finance companies are getting stricter due to world economy.
The finance company wanted a letter from accountant, two years tax returns and years company accounts. I have never been asked this before.
Why do they want tax returns? Why do they want company accounts? Can they not search for this information themselves on Companies House? I am worried that my accounts etc will show I can’t afford the car when I know I can. My income can vary.
The standard used to be three years accounts. They don't know how much you earn or whether you can afford it unless you give them proof. It's nothing to worry about.The finance company wanted a letter from accountant, two years tax returns and years company accounts. I have never been asked this before.
Why do they want tax returns? Why do they want company accounts? Can they not search for this information themselves on Companies House? I am worried that my accounts etc will show I can’t afford the car when I know I can. My income can vary.
If you were going to send me, say, £20K, wouldn't you want some evidence I could pay you back?
I am employed by the company however I’m a director of the company and considered self employed.
Regarding the deal. The dealer is keen that I take their finance (Ferrari) and said the deal would not be as competitive if I sourced my own finance. What kind of kick back or bonus do the dealers get from finance companies?
Regarding the deal. The dealer is keen that I take their finance (Ferrari) and said the deal would not be as competitive if I sourced my own finance. What kind of kick back or bonus do the dealers get from finance companies?
Jumpingjackflash said:
Hello,
I have been offered a great deal on a car and decided to buy it. I have been accepted for finance but the finance company are asking for lots of information. Maybe finance companies are getting stricter due to world economy.
The finance company wanted a letter from accountant, two years tax returns and years company accounts. I have never been asked this before.
Why do they want tax returns? Why do they want company accounts? Can they not search for this information themselves on Companies House? I am worried that my accounts etc will show I can’t afford the car when I know I can. My income can vary.
I hope everyone is well.
You haven't been accepted for finance, you have an approval pending further information. Supply the finance company with what they need and they will make a decision.I have been offered a great deal on a car and decided to buy it. I have been accepted for finance but the finance company are asking for lots of information. Maybe finance companies are getting stricter due to world economy.
The finance company wanted a letter from accountant, two years tax returns and years company accounts. I have never been asked this before.
Why do they want tax returns? Why do they want company accounts? Can they not search for this information themselves on Companies House? I am worried that my accounts etc will show I can’t afford the car when I know I can. My income can vary.
I hope everyone is well.
My reply is more of a generic reply in response to some of the posts........Eric is right........for taxation purposes and as far as HMRC as concerned. you are an employee of your Ltd Company.
But as far as mortgage lenders are concerned and I assume car finance firms even though I don't deal with them, they consider you to be self employed if your share of the business is over a certain percentage, usually 20-25%..........so if you apply for credit, you can't just provide three months pay slips like a PAYE applicant would, you need company accounts or Tax Calculations (formerly SA302's) and Tax Overview Forms........
But as far as mortgage lenders are concerned and I assume car finance firms even though I don't deal with them, they consider you to be self employed if your share of the business is over a certain percentage, usually 20-25%..........so if you apply for credit, you can't just provide three months pay slips like a PAYE applicant would, you need company accounts or Tax Calculations (formerly SA302's) and Tax Overview Forms........
Jumpingjackflash said:
I am employed by the company however I’m a director of the company and considered self employed.
That depends on the organisation with whom you are dealing.In law you are not self employed
For tax purposes you are not self employed
In other circumstances, some chose to equate being director/shareholder in a limited company as the equivalent of being self employed.
I always contend that the expression "self employed" is inaccurate and misleading. I much prefer the older and more correct expression "sole trader".That clearly distinguishes between those who run a business in their own name and those who may run a business through a separate legal entity, such as a limited company.
As you are a director of a limited company, those wishing to lend to you personally mist firstly consider your PERSONAL income as received from the company you are a director/shareholder of. That would be done by reviewing your salary (P60) and dividend income (dividend vouchers).
If you have been deliberately keeping one or both of those low for tax or any other purposes, you may have a problem showing sufficient personal income for borrowing purposes. Some lender MAY be prepared to look at the profitability and other factors related to the limited company but that is their choice and is nor consistent across the finance industry.
Jumpingjackflash said:
I am employed by the company however I’m a director of the company and considered self employed.
Regarding the deal. The dealer is keen that I take their finance (Ferrari) and said the deal would not be as competitive if I sourced my own finance. What kind of kick back or bonus do the dealers get from finance companies?
And you believed them! Regarding the deal. The dealer is keen that I take their finance (Ferrari) and said the deal would not be as competitive if I sourced my own finance. What kind of kick back or bonus do the dealers get from finance companies?
Contact Andy Wise at Fast Car Finance. He has just sorted out a good mate of mine with a brilliant deal, when he was struggling everywhere else.
I have no connection with him BTW, just trying to help.
Jumpingjackflash said:
I am employed by the company however I’m a director of the company and considered self employed.
Regarding the deal. The dealer is keen that I take their finance (Ferrari) and said the deal would not be as competitive if I sourced my own finance. What kind of kick back or bonus do the dealers get from finance companies?
I've never tried to buy a Ferrari, but I was very tempted by a 3 year old Maserati for sale at a Maserati / Ferrari main dealer. On the surface their finance numbers look very tempting for a PCP. But when the euphoria subsides, you can see that the GFV + Deposit pretty much adds up to the deal price of the car, and the monthly payments are effectively interest on the GFV. The interest rates on this finance were something like 9.8%. They were offering sweeteners on the deal - all of which were dependent on me taking out their finance. I didn't buy the car in the end. I am very much of the opinion that the finance charges are a major part of the dealer profit margin, and that you might be better off with a less competitive deal on the purchase price of the car but using cheaper finance.Regarding the deal. The dealer is keen that I take their finance (Ferrari) and said the deal would not be as competitive if I sourced my own finance. What kind of kick back or bonus do the dealers get from finance companies?
If its a "normal" used car then Mann Island Finance or Oracle would be the two I would try.
Both are likely to use Barclays Partner Finance to actually fund the vehicle and rates will be virtually the same. I have used both, Oracle 4-5 times actually.
I have never been asked to prove my income although not had a car on finance for a couple of years now.
Both are likely to use Barclays Partner Finance to actually fund the vehicle and rates will be virtually the same. I have used both, Oracle 4-5 times actually.
I have never been asked to prove my income although not had a car on finance for a couple of years now.
Jumpingjackflash said:
I am employed by the company however I’m a director of the company and considered self employed.
Regarding the deal. The dealer is keen that I take their finance (Ferrari) and said the deal would not be as competitive if I sourced my own finance. What kind of kick back or bonus do the dealers get from finance companies?
Ferrari finance are a pain in the ass and want to know your inside leg measurement and first born's eye colour.Regarding the deal. The dealer is keen that I take their finance (Ferrari) and said the deal would not be as competitive if I sourced my own finance. What kind of kick back or bonus do the dealers get from finance companies?
I eventually refused to deal with them as I thought wanting to finance 25% of a 458 with the rest in cash was as secure a deal as a finance house could ask for. I wanted to finance 40k on a 160k car, not 150k! It was just ridiculous.
My dealer sorted it through Bentley finance (VW). They didn't even credit check me!
I'd ask the dealer to find a solution. They will...they want to sell the car!
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