As a business owner, maintaining both your personal and business finances can be a struggle, with many putting the needs of the business above their own. However, neglecting your personal finances can lead to future difficulties, especially when you decide to apply for credit that is not business-related. If you have been thinking of getting a new car, for example, finding lenders to help if your personal finances are not under control may be difficult. Here are some quick tips on managing your finances to help make this type of purchase easier.
Table of Contents
Find the Right Lender
Before approaching a lender, you’ll want to make sure they are aligned with your circumstances. If you are just starting as a business owner or your personal income is low, finding suitable credit options to buy a car may take some time, as you mayparticularly if you have a bad or low credit rating. However, you will be able to find specialist lenders that can help those in a similar situation, including those who are self-employed. Car finance for bad credit is designed to help car buyers with a less than perfect credit history purchase a car with affordable repayments. Whilst they will perform a credit check, they will focus on your affordability, so that a finance package can be offered that matches. They can’t guarantee approval, but they are better placed to help compared to other types of lenders.
Keep Business & Personal Separate
Being able to keep control of your personal finances is made much simpler if these are kept separate from your business. Having them mixed will only cause problems, especially as your business starts to grow and expenses mount up. Having separate accounts should be a priority so that all personal expenses are clearly defined, and you can keep track of any essential outgoings such as a mortgage or existing debt repayments. This will also help you to clearly work out your personal income and expenditure, which is essential when applying for car finance as a bad credit applicant. You will need to prove your affordability, so having your accounts separate will make reviewing this less daunting and not have any business expense or revenue overlapping.
Ensure You Can Maintain Repayments
Quite simply, whenever looking to apply for credit it should be affordable, otherwise repayments can be missed, and problems start to mount. You may have an approximate idea of what you can afford towards car finance, however, without knowing this exactly, you could be missing out essential outgoings and end up overextending yourself with further borrowing. To avoid this, taking the time to review what your disposable income is after all essential personal expenses are covered is crucial. As an entrepreneur, it can be difficult defining what your income is each month as it may vary, so this will need to be considered before applying for further credit. If it is not clear you can afford to take on car finance, you may need to reconsider your current situation first.
Check Your Credit Report
Your credit report will provide an overview of your finances, something that a lender can access during the approval process. If you don’t already check this periodically, it’s a good idea to do so to ensure all information is accurate and there is nothing that can be quickly rectified that is having a negative impact. You will also discover the reasons for having bad credit, although you should know if you have any arrears outstanding or whether you have had a default or CCJ against your name. Understanding the details of your credit report will influence any financial decisions you make, helping highlight where your focus should be. If you have a high level of credit already, for example, you may want to focus on reducing this first before taking out further finance. Being as informed as possible will help you make savvier decisions.
