If you are both credit-challenged and self employed, you need to consider how underreporting your income would affect qualifying for a loan.
Subprime lenders require proof of income, and their position is that an applicant's income must be verified with a
professionally prepared tax return.
They also use this verifiable income to determine a budget for a car payment. This can affect self employed people in
a couple of ways:
1. A minimum income requirement of between $1,500 and $1,800 per month. For self employed people this means reporting a
minimum yearly net profit of $18,000 to $21,600.
2. Even if you meet this requirement, there is also the chance that monthly expenses are out of proportion to it.
For example, say someone reports an income of $2,000 per month though actual income is $3,500. Reasonable monthly
expenses could be $1,800.
In this case, even though the actual debt to income ratio is acceptable, the difference between reported income and
actual expenses would not qualify that person for a bad credit auto loan.
If the income on your tax returns is too low, or if your monthly debts are not in line with what you say you earn, than
you will likely not qualify for a "No Credit Auto Loan".