The term low doc loans are taken from the home loan industry and each car loan lender that has these available may label them differently, but they are similar to that of a low doc home loan for car loans, with two major points of difference, you are not penalised by a higher interest rate if you were to use this option and the vehicle must be used predominantly for business purposes.
The only documents required to satisfy a low doc car loan are the following:-
- Proof of ID
- Proof of comprehensive insurance over the car being purchased
- Trust Deed (if the entity applying has a trust involved)
- Partnership Agreement (if the entity is any type of partnership other than a family partnership)
All proof of income will be waived as long as the criteria are satisfied by the lender being applied to. Not every lender has low doc car loans available and each lender that does may be slightly different.
So what are the criteria to apply?
The main thing to qualify would be that the vehicle is going to be used for more than 50% business use and with most lenders you would require to have held an ABN for a minimum of twelve months.
The only exception to this rule, is if the car is being used by an employee who uses their car for more than 50% business use, like a sales rep that receives a car allowance for example, but they would also need to be trading a car in, or have paid out a similar car loan within 6 months of the new application that was conducted well and also checkable by way of credit reference. Not every lender will allow this scenario though.
ABN holders usually need to have had their ABN active for a minimum of twelve months and with some lenders; they require this to be 24 months. In some cases with some lenders the ABN is required to be GST registered for a minimum of twelve months; however there are options available with other lenders that will allow low doc car loans without GST registration.
The applicant would still also need to declare their income without providing financial evidence and may have to sign off on this declaration dependent on the lender.
If the applicant is not trading in a car that has finance currently on it, or has paid out a loan within 6 months that was similar and comparable, the other options to apply for a low doc car loan would be either 30% equity into the application via either trade equity or cash deposit, or alternatively they would require to be a home owner or buyer to qualify.
Low doc car loans are a great option for those who don’t have up-to-date financial statements due to many circumstances, or for those who just want an easier, quicker approval if they qualified.
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