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In AB, what should I know about self-employed borrowers for car loans?
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In AB, what should I know about self-employed borrowers for car loans?

For self-employed borrowers in Alberta seeking car loans, lenders require extensive documentation to assess income stability and repayment capacity, which is often perceived as higher risk than traditional salaried employment. You'll typically need to provide your last two to three years of personal (T1) and/or corporate (T2) tax returns, along with corresponding Notices of Assessment (NOAs) from the CRA, as these documents verify declared income. Furthermore, recent business and personal bank statements (usually 6-12 months) are essential to demonstrate consistent cash flow and financial health, as self-employment income can fluctuate and taxable income may be reduced by legitimate business write-offs. Due to this perceived variability and the common practice of minimizing taxable income through deductions, self-employed individuals often face higher interest rates or may be required to provide a larger down payment compared to salaried applicants, especially in the current Canadian market where lenders remain cautious about credit risk. This matters because lenders need to clearly understand your true, sustainable gross income and business longevity to approve financing, making thorough preparation of your financial records paramount for a successful application in Alberta.

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Related Topics: ab province topic

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