Financing a Trailer When You Are Self-Employed

A large share of the trailers that leave our lot go to people who work for themselves: landscapers, contractors, mobile detailers, welders, vendors, hauling side businesses. Almost none of them have a W-2. Financing still works for them, but the application looks a little different, and knowing that ahead of time keeps the process short. Our financing page covers the programs; this post covers the self-employed part.

What a lender is actually asking

Every lender wants to answer two questions: can this person make the payment, and will they. The second is the credit history. The first is income, and for a W-2 employee it is answered by a pay stub. For a self-employed buyer the lender needs another way to see the money coming in. That is all the extra paperwork is: a substitute for the pay stub.

What to have ready

• Bank statements, usually the most recent two or three months, showing deposits from the business.
• Your most recent tax return, or two if the business has been going a while. Lenders read Schedule C for a sole proprietor.
• A 1099 or two if you are paid by a handful of regular clients.
• Proof the business exists: a business license, a DBA filing or an LLC registration.
• Your driver's license and proof of address, same as anyone else.

Not every lender asks for all of it, and some programs need less than others. Bringing it anyway shortens the approval.

The write-off problem

Here is the part that surprises people. If you run every expense you can through the business, your tax return shows a small profit, and a lender that underwrites from the return sees a small income. That is not a mistake on your part; it is how the tax code works. But it means a buyer who deposits plenty every month can look thin on paper.

Two things help. First, bank statements show deposits before deductions, and lenders that use them see the real cash flow. Second, be ready to explain the return: which deductions are paper deductions like depreciation, and what the business actually cleared. A lender who works with tradespeople regularly understands this conversation.

Buying in the business name

If the trailer is for work and you have an LLC, you can apply as the business, often with a personal guarantee. That keeps the trailer on the business books, which matters for taxes and for insurance. Our post on buying through a business vs personally walks through the trade-offs. For a brand-new business with no history, most lenders will still want to see your personal credit.

If the credit is rough

Self-employed income and a thin or damaged credit file often go together, especially after a slow year. That combination is exactly what our credit-friendly programs are for. A larger down payment does more for a self-employed application than for almost anyone else, because it lowers the amount the lender has to trust the income for. Our guide to financing with bad credit in Georgia covers the rest.

Pick the trailer with the payment in mind

Self-employed buyers have one advantage over everyone else: the trailer is going to earn its own payment. That makes the choice of unit part of the financing conversation. A tandem 7-wide from our in-stock inventory that goes to work on Monday is a different proposition from a fully built-out custom unit that takes weeks to arrive, and a lender looks at the two differently as well. If the budget is tight, the Steals & Deals page is where the closeout and clearance units live, and a lower purchase amount is the simplest way to a lower payment.

How the process runs

You apply online or by phone, we send the application to the lenders whose programs fit your profile, and you hear back, usually the same day. Because we work with a range of lenders, one lender's no is not the end of it. If you want to know where you stand before you pick a trailer, call us at (800) 281-5084 and we will walk through it.