Securing vehicle finance without a pay slip

Why should vehicle financing still be designed for someone who has only ever worked a nine to five. It doesn't have to be. The finance industry has been slow to catch up to these trends, but they are finally doing so.

In the wake of the COVID-19 pandemic and tough economic conditions more South Africans are earning a living on their own terms. Many have turned a skill, a passion or a side project into something that pays the bills and more.

Freelancing, creating content, running a small business and building careers that don't fit a traditional job title or organogram are common in the modern working world. In addition many South Africans have a side hustle or two, bolstering their primary income with alternative revenue streams in their spare time.

So why should the way that cars are financed still be designed for motorists who only work a nine to five and get a pay slip from their employer. It doesn't have to be. The finance industry has been slow to catch up to these trends, but they are finally doing so.

A pay slip doesn't paint the whole story

In the past if you applied for any type of finance, the first piece of documentation that you were asked for was your pay slip. Vehicle finance was reserved for those who had a fixed monthly salary, reflected on a traditional pay slip as this was seen as the only way to demonstrate reliable income.

For many self-employed South Africans, freelancers and hustlers, the pay slip requirement has been a real source of frustration.

Fortunately financing institutions are moving away from this rigid approach. What lenders are now really trying to understand is as straightforward as if you can afford this commitment and if you have a track record of managing your finances responsibly. While a pay slip can answer those questions it is not the only way to do so.

In basic terms, all that financing institutions need to be able to determine vehicle finance eligibility is whether an applicant can afford the commitment that they are taking on and there are several ways to demonstrate that.

Showcasing your alternative income streams

If you receive multiple streams of income through freelancing, being self-employed or running your own business or side hustle, documentation such as three to six months bank statements can show your cash flow patterns over time while invoices and client contracts will be able to confirm if you have ongoing and upcoming work lined up.

Alongside these documents, lenders will assess your overall affordability, looking at your income relative to your monthly expenses and existing financial commitments. Factors such as your credit score and repayment history will also be taken into account, as they are a good reflection of your financial discipline.

Get your financial affairs in order

One of the most important things that you can do to ensure that you are granted credit when you need it is to keep your financial affairs in order. This includes keeping financial records up to date, staying on top of your credit profile and being able to show a consistent income picture over time. The stronger and clearer that picture, the more confident the lender will be in saying yes.

Be honest with yourself

It is also very important to be honest with yourself about what you can comfortably afford. Choosing a vehicle that works within your available monthly income rather than one that puts pressure on your cashflow is a sound financial decision.

Building an income on your own terms takes discipline, resilience and financial awareness, which are the same qualities that will make you a good vehicle financing applicant.

Vehicle finance for the self-employed is not out of reach, with the right preparation and a clear picture of your finances, it is achievable.

Do your research

In addition to being honest with yourself it is important to take a careful look at your budget and income projections in order to determine what you will be able to comfortably afford across the entire contract period. Motus Select offer a variety of useful online tools including their vehicle finance calculator which allows shoppers to determine exactly how much a particular vehicle will cost on a monthly basis and over the contract period, while taking all the various financing factors into account. 

The affordability calculator is another great tool that will help motorists determine exactly what they can afford.