Applying for a car loan means having certain documentation. You will likely need your pay stubs or some proof of income. You will also need to present how long you have been on the job and show some form of ability to repay the car loan, like stability in your job and income. These requirements may become an issue if you are a freelancer since the way payments are given are handled in a vastly different way than an employee. If you are a freelancer, this leaves you considering what to do if you apply for a lo doc car loan. Here is what you should consider before taking on the lo doc application:
Proof of Income Guidelines
The first thing to consider is what proof of income the company you are using for lo doc car loans needs. Some companies do not require anything other than an income statement. This could be a statement from a third party payment processor that shows where your deposits are coming in and for how long. You may also be able to use your bank statement if you use the third party payment processor and then withdraw it to your bank. These statements will also show the company if you have any assets or if the money is funneled out quickly. This would show them if you are a high risk as well.
Interest Rates for Freelancers
When you take out a lo doc car loan, you likely have a set amount that you need in mind. What people tend to forget is that there are interest rates to this. That means you will be paying the amount you needed back as well as extra money in fees and interest rates. All lo doc car loans will have these interest rates, but make sure that the rates you are considering do not exceed the budget you have to repay that amount. As a freelancer, this becomes vital since you may have times of the year where you have more income than others and you need to ensure you can pay the loan year round.
A consideration that many freelancers do not think on is the guideline for the payback of that loan. Keep in mind that you need to read what happens if you are a day late, or ten days late. You need to make sure that you understand what the company can do to recoup their money if you are unable to pay the loan. You also need to find out all of the options to repay the loan. This could be paid in person, payment online, or payment through direct withdrawal from your bank. As a freelancer, this means more to you than as a traditional employee since your income may increase or decrease depending on the time of year and you need to ensure that no matter what is going on with that income you have a method of payment option that will work.
By keeping these points in mind, you will be better prepared to choose the right lo doc car loan company for you. You will also be able to choose the right options on a loan when they are available.Share