How to Get a Car Loan When You’re Self-Employed

1. Check Your Credit Score

Credit plays a big role in getting approved for a car loan, especially when your income might be less cut-and-dried. Before you head to the dealership or start filling out applications, check your credit.

Although lenders look at specific credit scores for car loans, checking your FICO^® Score^Θ from Experian will give you a good indication of where your credit stands. While you're at it, also check your credit report for late payments or other negative information that might affect your loan approval.

Learn more: How Does Financing a Car Work?

2. Prepare Proof of Income

Lenders want to see proof that you have a steady, reliable income stream. But, if you're self-employed, documenting income is often more complicated than submitting a few pay stubs and W-2 forms. Though every lender has its own requirements, here are some examples of documents you might need to provide:

• Bank statements: You may need six to 12 months of bank statements showing your business income month over month. Bank deposits can show a steady flow of income over time, which is what your lender wants to see.
• Tax returns: Tax returns allow your lender to verify your income. Tax returns may also show your regular business expenses, as well as other sources of income, such as investment income. Your tax returns should include 1099s and Schedule Cs.
• Profit and loss statement: A profit and loss statement gives a snapshot of how your business is doing, year to date, since your last tax return was filed. You may also want to submit a balance sheet showing your business's cumulative assets.
• Invoices, contracts or expenses receipts: If you have invoices to show receivables, that may help to show continuing cash flow. Contracts that indicate a commitment over time can also show stability.

3. Size Up Your Debts

Lenders will consider your debt-to-income ratio (DTI) when reviewing your loan application. DTI, or your monthly debt payments divided by your monthly income, helps lenders determine how much car loan you can afford.

Here are the debts your lender will consider:

• Housing (mortgage plus property taxes and insurance, or rent)
• Car payments
• Credit card minimum payments
• Personal loan payments
• Student loan payments
• Payments on second mortgages, including home equity loans and home equity lines of credit

Auto lenders may not be as strict about DTI as mortgage lenders. For an auto loan, having a DTI as high as 50% may still be acceptable. Still, the lower your DTI, the better—all the more so if your income is variable. To estimate your DTI, add up your monthly debt obligations and divide the total by your gross (pretax) monthly income.

Tip: Using a car payment calculator can help you estimate how much you can afford to spend on a car. A calculator lets you play around with different down payments and loan amounts so you can find the right combination for you.

Car payment calculator

4. Get Preapproved With Multiple Lenders

Even if you hope to finance your car through the dealership, you may want to get preapproved for a loan (or two) before you head to the showroom. Comparing preapproved loan offers is generally a good idea, but it may be especially helpful for self-employed borrowers. Here's why:

• You can compare interest rates. A preapproval gets you all the way through the application process so you see what your actual rate will be on a loan. Developing these options on your own, before you meet with a dealer, gives you the data you need to know which rate is best, and whether or not dealer financing is a good option.
• You can take your time with the application. Because documentation can be more complicated when you're self-employed, being able to apply from the comfort of your home (or office) is a big plus. You can gather bank statements, tax returns, cash flow statements and other documents you need as they're needed.
• You can close the deal no matter what. When you have preapprovals, you have options. If dealer financing hits a snag—or comes in at a high annual percentage rate (APR)—you'll still be prepared to close the deal and get the car you want.

Learn more: Prequalified vs. Preapproved: What's the Difference?

5. Put More Money Down

If getting approved for a loan proves to be a challenge, consider increasing your down payment. A bigger down payment shows the lender you have a bigger stake in the transaction. It also decreases your loan size, which could make it easier to get approved

Tip: Aim to put at least 20% down on a new car or 10% down on a used car to help qualify for the best rates and keep your monthly payments affordable.

6. Get a Cosigner if Necessary

Adding a cosigner with good credit and a steady income could make a difference in your loan application. But be aware: Cosigning a loan is a serious commitment. A cosigner puts their own credit on the line and agrees to pay your loan if you don't. If a loved one is kind enough to cosign your loan, make sure you return the favor by paying it back conscientiously.

Learn more: Pros and Cons of a Cosigner on a Car Loan

The Bottom Line

According to Experian data from the first quarter of 2025, 80.52% of new car buyers and 37.07% of used car buyers finance their purchases. You can do the same, even if you're self-employed. Be prepared to document your income and comparison shop for the right loan.

Since good credit can help tip the scales toward loan approval, you may want to check your credit for free, preferably well in advance of applying for a loan, in case you need to work on your credit score. You might also want to consider free credit monitoring from Experian. It'll help you keep track of your credit score as well as any changes to your credit report that may occur.