Self Employed Car Finance

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Rates from 7.9% APR. Representative APR 22.09%

Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 22.09%, the monthly payment would be £152.49, with a total cost of credit of £2,319.37 and a total amount payable of £7319.37. CarLoans UK is a broker not a lender.

What Is Self Employed Car Finance?

Stepping away from the 9-5 and becoming your own boss can be immensely rewarding. There are a lot of positives about becoming self-employed: you can choose your own hours, pick the clients you want to work with and have greater freedom. However, this lifestyle can have its downsides – when do you switch off? – and also if you need to use financial services you can come across difficulties. As with mortgages, self employed car finance can be harder to find than for those more traditionally employed.

Most lenders, especially those offering the better deals, will need three years worth of accounts to approve a loan. While no lender can legally guarantee a loan, there are ways around it.

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Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 22.09%, the monthly payment would be £152.49, with a total cost of credit of £2,319.37 and a total amount payable of £7319.37. CarLoans UK is a broker not a lender.

How Does Car Finance Work?

The Initial Deposit

This step isn’t always required. Although, placing down a deposit when completing a car finance agreement is highly recommended.

Repayment Plans

Depending on the agreement that has been put in place for example HP, PCP & CS, your repayment plan may vary.

Contract Completion

Upon completion of your contract, you will then have a number of different options available to you. Which we will state below.

Self Employed Finance Questions Answered

Being self employed has never been so popular, with the Office of National Statistics reporting a record high of 5 million people in 2019 as self-employed. New technology has made it easier to work wherever and whenever it is convenient for you, fitting it around your lifestyle and other commitments. Your choice of career shouldn’t dictate whether or not you can make car ownership more affordable.

Buying a car outright is expensive, so many people opt to buy a car on finance, spreading the cost of the car over more manageable monthly payments.

When you apply for a loan, every lender will review the application to see whether you have the income to meet the repayment schedule. Lenders are renowned for being risk-averse and will only lend money if they feel confident that they will receive their repayments. People who are self-employed are often seen as a riskier prospect as their income may not be as secure as those employed.

If you have bad credit rating you may have concerns about applying for car finance or other loans. An unreliable income makes it harder to stick to a monthly repayment schedule which can have a negative impact on your credit rating, in turn making you a riskier prospect for lenders.

The interest rates and terms lenders may offer you will be determined by whether you have a deposit to put down and the amount of the deposit, plus your credit rating.

A Hire Purchase option could help you boost your credit score; you are able to spread the cost of the car across monthly repayments and by maintaining the schedule you can improve your credit score. A healthy credit rating is helpful in the long run. More information regarding bad credit car finance can be found here.

Lenders are expected to behave responsibly, as set out by the Financial Conduct Authority; by ensuring the borrower can meet the repayment commitment, they are protecting the borrower and themselves from potential financial difficulty.

They will need information from you to prove you are reliable; easy to do when you are in full-time employment where you can show an employment contract, evidence of a monthly income and how long you have been in employment. When you are self-employed, it is harder to demonstrate reliability but some lenders will accept one or two years, and some will even accept three months’ of bank statements and use an average of income.

Tax returns may also be allowed, and evidence of trading may also be required. The net profit of your business after tax will be what they look at.

Your choice of vehicle will be required by the lender. The choice of vehicle will make a difference to the rates you will pay and will also have an effect on the overall cost of ownership – tax, insurance, fuel and any other upkeep requirements could cost more than other choices of cars. It’s recommended you think carefully before deciding on a particular brand of car; those with a more powerful engine may use more fuel or a vehicle with extra modifications may incur higher insurance fees.

If the vehicle is going to be used as a business vehicle, you may find some lenders will not consider agreeing on a loan. The key reason for this is that business vehicles are used more and therefore require more maintenance and upkeep than the average vehicle. The mileage is also likely to be higher. This could result in the car being worth less than the value of the loan, which is not ideal if you default on repayments. A good example of this is a driving school or taxi service.

You should also be honest about your earnings and outgoings and not try to inflate your income. Applying for a loan that is more than you can afford will mean you are likely to be declined, which could be detrimental to your credit rating.

If you have the time to get your finances in order and back on track, it’s worth taking the time to do so before making an application. There are a few other things you can do before which could improve your chances.

– Electoral Roll
If you aren’t already registered, being on the roll establishes your identity and will demonstrate to the lender that you’re settled. Living at the same address for a significant amount of time can only be in your favor.

– Check your credit rating.
There are a number ofseveral credit agencies in the UK you can use to determine your score. The credit agencies will have your name, address, whether you’re on the electoral roll, and any County Court Judgements issued against you. Plus overdrafts, loan defaults and applications you have made. It may also be worth taking the time to stop any non-essential subscriptions such as magazines, or television and joint bank accounts with people whose credit rating is poor, as this can be detrimental to your own credit score. It does not record the results of those applications, however. It is recommended you investigate any debt that you aren’t sure about, sometimes debts can be registered incorrectly.

– Outstanding debt

If possible, get all outstanding debts paid up and on schedule.

CriteriaPersonal Contract Purchase (PCP)Hire Purchase (HP)Conditional Sale (CS)
The Initial DepositThe Majority of Lenders Will Require A DepositOptionalOptional
Repayment PlanYou Pay Less But Have 3 Options At The End of Your AgreementPayments Are Slightly Higher Than PCP However You Will Own The Car At The End of Your AgreementPayments Are Slightly Higher Than PCP However You Will Own The Car At The End of Your Agreement
Contract Completion• Optional Final Payment - Pay This And Own The Car

• Pay Nothing More And Hand The Car Back

• Trade The Car In, Using Positive Equity To Fund The Deposit For Your Next Vehicle.
A Small ‘Option To Purchase’ Fee, Which You Need To Pay To Become The Legal Owner Of The Vehicle (Maximum £50)No Final Payment, Car Is Yours After The Last Instalment
Fixed Monthly PaymentsYes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments.Yes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments.Yes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments.

Car Finance Comparison In More Detail

At CarLoansUK, we provide numerous amounts of different finance options across our car finance brokerage site. Which then allows you to find the best way to pay with ease. Including but not limited to PCP Car Finance, HP Car Finance or No Deposit Car Finance just to name a few. Because CarLoansUK has got you covered,  don’t believe us? Then take a look at our excellent trust pilot reviews and see for yourself.

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Frequently Asked Questions

A car finance broker is essentially a middle man between the customer and the lender. A car loan finance broker will take care of all of the complicated paperwork as well as the negotiations with lenders. Which essentially means you can sit back and relax knowing that the broker is fighting your corner to get you the best deal possible. All whilst making your car finance journey as stress free as possible. Not only this but car finance brokers such as ourselves, also have deals that aren’t usually available to the general public, and to top it all off. Car finance brokers will actually charge the dealerships instead of the customer.


If you have been refused by other brokers in the past, all is not lost. At CarLoans UK we have a number of finance options for those with bad credit scores. However, you should be aware that when you apply for car finance through us, a hard credit check will be conducted, which may in turn have a negative impact on your credit score. Especially if these credit checks have been done in quick succession. So therefore it is recommended that after being declined for car finance, you should wait between 3-6 months before applying again.

If you are struggling to keep up with your car finance repayment plan. There are a number of options available to you. It is of great importance that you obtain free independent advice from one of the following charities/organisations. 

Money Advice Service

National Debt Line

Citizens Advice

Initially, applying for a car loan usually will have a negative impact on your credit score. Although, you should be aware that if you make your car loan repayments on time. This will most likely have a positive impact on your credit score.


APR stands for annual percentage rate and is the total amount charged for the lend. There are, however, two different types of APR.Exact APR in short means that the rate that is shown to you, is the rate that you will get. Whereas, representative APR however, means that 51% or more of the people who apply for the finance will receive that rate. What this means is that customers with poor credit scores could see a higher APR.

Representative APR is, for the most part, used to advertise the companies rates. After you have provided all of the necessary information to the lender, they can then offer you your exact APR rate.

What is it?

Gap insurance stands for Guaranteed Asset Protection.

Essentially gap insurance is, is a form of insurance that is designed to cover the difference between the amount your insurance provider pays out in the event of your vehicle either being written off or stolen and the price that you paid for the vehicle. You should however be aware that gap insurance works alongside your standard car insurance and is in no way a substitute.

So when is gap insurance needed?

Gap insurance can be worthwhile in several ways. Firstly, if you have taken out a big loan to buy your car. Gap insurance would be beneficial as mentioned previously if your car is stolen or written off. This is because the gap will pay off the outstanding finance.

As well as this, gap insurance could also be beneficial if you are worried about your car depreciating. A brand new car will lose between 15-35% of its value in the first year. Therefore gap insurance can help you get a bigger payout if your car is written off after it has already depreciated.

Where can I get gap insurance?

Comparing gap insurance quotes has never been easier thanks to Bright Compare!

If the vehicle is faulty on delivery, you can simply refuse the car and send it back to the dealership.

You can, however, you will have to ask the finance company for permission prior to making any sort of modifications.

When you select HP finance, you agree to pay the total value of the vehicle, calculated as monthly instalments for the duration of your contract. Because interest and the final fee are added to your payment commitments. Therefore when you have made all agreed payments, you own the car.

Furthermore leasing a car involves monthly payments too, but these are rental payments only. Because the monthly figure you pay when you lease a car is calculated using different criteria such as a set mileage. Then at the end of your lease, the vehicle is returned to the dealership

The Finance and Leasing Association (FLA) offers handy information to help you navigate closed showrooms during lockdown, and beyond. Furthermore their website is well worth a look to help with any lingering lockdown car purchase confusion.

A quick look at their latest statistics reveal the FLA are forecasting a challenging outlook to 2021’s first quarter (1 January to 31 March). Due to ongoing pandemic restrictions and lockdown measures, closing car showrooms nationwide, new car finance declined by 24% last year. Not to mention the latest figures also show FLA members provided £30billion in new finance, and £62billion in new credit since the start of the pandemic in 2020. Therefore car dealerships have adapted in all sorts of ingenious ways to help you continue to access vehicles as normally as possible.

Due to the financial uncertainty surrounding the pandemic, applications for car payment holidays have been extended until 31 March 2021. Car payment holidays are arranged for up to six months, and are a formal arrangement with your HP finance provider.

Defaulting on your car payments is a serious issue, especially if you are committed to a HP finance contract. Because as we mentioned earlier, your car is used to secure the finance deal and if you default or cannot meet your payments, the car may be repossessed. Not to Mention, experts emphasise the importance of contacting your HP finance provider as soon as you are aware that you may experience difficulty in meeting your agreed monthly instalments.

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CarLoansUK © 2022 All rights reserved

Car Loans UK is a trading style of Wallace Bohen Ltd, a company registered in England and Wales. (Company number: 12382512, Registered Address: 4th Floor, Kingsgate, Wellington Road North, Stockport, Cheshire, SK4 1LW. We act as a credit broker and not a lender and are authorised and regulated by the Financial Conduct Authority for consumer credit FCA no.928674. CarLoansUK can introduce customers to a limited number of finance providers based on overall credit profile and may receive a commission for such introductions, this will not impact the rate you are provided. We do not charge a fee to the customer for arranging the finance. Written quotations on request. All finance subject to terms and status Data Protection Registration No.ZA766848.

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