Loan for a self-employed / contractor

greenfrog_2

Hi, I'm looking for some advice concerning a loan application for a car I intend to purchase.

My area of concern regarding my income. I currently work as a contractor in the banking industry. It makes sense for me to receive my pay via a limited company.

However it looks like this may cause some problems when applying for a loan. I don't really consider myself to be self-employed as I am considered to be an employee for the bank I work for. My last contract lasted a 1 and a half years. Yet it looks like from a lenders perspective I am self-employed.

I recently applied to Tesco and was initially accepted. However further along the process I had to cancel my application as I did not have two years of audited accounts (I have only been paid in the manner for the last 18 months).

I've recently spoken to Sainsburys. Interestingly they said that they do not consider me self-employed as I work for a limited company (despite the fact I own 100% of it).

I guess what I'm asking is has anyone else had a similar experience applying for a loan as either self employed via a limited company or a contractor without a permanent contract of employment?

One further question: I don't take all my earning from the limited company for tax purposes, and to safeguard against potential periods of unemployment. When applying for a loan should I put my total earnings as paid to me by my employer, or my total taking from the company?

Any help would be greatly appreciated.

Many thanks,
Lee

chalkie99

Jeez! No wonder the banking industry got itself into such a mess.

I think you need to sit down with an accountant and get them to explain to you the situation as it is.

If you have formed a limited company then you are not self employed and you are not an employee of the bank. You are an employee of the limited company which you formed.

Did you get advice on the implications of what you were setting up before doing so?

greenfrog_2

Thanks for the reply.

However I think you've missed the thrust of my question. I'm not looking for an explanation of the structure of limited company and my relationship with it. That I understand.

Rather, I am looking to get some feedback from others in a similar boat that may have applied for a loan.

The reason for my confusion stems from the differing perspectives of the lenders I have spoken to.

Some lenders (for example Tesco) classify me as self-employed (as I own 100% of the limited company), whilst other (Sainsburys) insist I am an employee.

I would have thought my chances of success will increase if I apply to a lender which considers me an employee, rather than self-employed. Anyone have any ideas?

chalkie99

greenfrog wrote: »

I'm not looking for an explanation of the structure of limited company and my relationship with it. That I understand.

Sorry, but from your initial post I really don't think you do.

You are an employee of a limited company and the bank is a customer of that company.

It would seem to me that if you are applying for a business loan then you would need a decent set of accounts to get acceptance and if you are trying to get a personal loan then if you are drawing a minimal wage then that is going to go against you too.