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

For self-employed borrowers seeking car loans in Ontario, lenders require robust documentation to verify income stability and capacity to repay, often looking beyond just gross revenue due to common tax write-offs. You should prepare to provide your T1 General tax returns and corresponding Notices of Assessment (NOAs) for the past two to three years, as lenders typically assess your *taxable* income, not gross. If incorporated, your T2 corporate tax returns and detailed financial statements will also be necessary. Furthermore, personal and business bank statements spanning three to six months are crucial to demonstrate consistent cash flow and business activity, along with potentially business registration documents or client contracts.

Why this matters: Lenders perceive self-employment as carrying a higher risk due to potential income fluctuations and the absence of traditional pay stubs. Consequently, even with excellent credit, self-employed individuals may face higher interest rates or be required to make a larger down payment compared to salaried employees, especially in a competitive or tightening credit market like we might see in 2025. Demonstrating a consistent history of profitability and strong financial management through comprehensive documentation is key to securing favourable terms and proving your creditworthiness.