For business use loans, some lenders have the options of giving the ability to declare your own income without proof of financial statements dependent on the applicant’s profile, and the requirements are a little different between each lender.
Typical Approval Guidelines
The general guidelines to qualify for a self-declaration car loan are the following and not all of these are a requirement to qualify, but in some cases a combination dependent on lender:-
- Home Owner or Buyer
- ABN Holder (minimum 12 months) – some lenders will require minimum ABN to be active for 24 months and that the ABN is GST registered for a minimum of 12 months. Other lenders may not be fussed if your ABN is GST registered, but if it isn’t, the income declaration is required to be under the annual turnover threshold which requires you to be registered for GST by the Australian Taxation Office, currently $75,000 p.a. at the time of writing.
- If not a home owner or buyer, 30% equity may be required, which can be made up of trade in equity, and/or cash deposit
- Well conducted comparable checkable car loan history paid out within 6 months of your new application, or replacing at the time of application. Each lender is a little different, but they may allow you to increase your amount financed, or repayments from your last borrow by 25%.
How do I apply if I qualify?
Your introducer, whether they are a broker, the lender direct, or dealership finance, will ask you some qualifying questions to establish if you satisfy the conditions of a self-declaration car loan. The application will be presented as per normal, but the assessment process is slightly different, where the lender will run a check on your credit file and ABN and perhaps any past credit and approve on the grounds that you have declared your own annual income, as long as affordability is still evident from the income you have declared.
The only additional documentation required for approval may be trust deeds or a partnership agreement depending on the entity applying for the loan, but generally a company, sole traders and family partnerships do not require any documentation other than proof of identification.
What are the requirements for settlement?
The settlement process is a lot easier, as all that would be required to supply in addition to the signed contracts, which would include your self-declaration of income, would be your proof of identification and proof of full comprehensive insurance on the vehicle and the loan would settle as normal.
Self-declaration car loans are very useful for those who cannot provide up-to-date financial statements due to many circumstances, or if their business has been in operation for less than one full financial year and those statements do not reflect their actual earnings, due to not being a full twelve months of proof of income. Ask your introducer about this product, as often you may be surprised that you can qualify for a car loan earlier than what you may have thought.
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