What is a Low Doc Car Loan?

The terms ‘low-doc loans' or ‘self-declaration loans' started in the home loan industry and refer to a loan product that requires less documentation than what would normally be required of an applicant.

This type of loan suits borrowers who don't have regular or stable income or recent tax-returns like freelancers, self-employed or sole-traders, contractors and others who may not have typical financial paperwork like an employer's payslip. 

When it comes to low-doc car loans there are two major points of difference. First, they don't always come with a higher rate of interest compared with normal-doc car loans and second, the vehicle's useage often needs to be primarily business use.

So what docs do I need?

As the name suggests, applying for low-doc car loans require less paperwork than a regular car loan. At a minimum you need:

  • Proof of ID
  • Proof of comprehensive insurance over the car being purchased
  • Trust Deed or Partnership agreement if applicable to your business
  • Evidence that your ABN has been active for over two years

Not every lender has low-doc car loans available and each lender that does may have a different eligibility or lending criteria and document requirements,  e.g. bank statements, so this is a guide only.

Pros and cons of low-doc car loans 

The Pros:

  • Useful for people who have difficulty proving their income
  • Simpler application process with less documentation requirements
  • Low-doc car loans can be used to finance a business vehicle that can also be used for personal use in certain cases 
  • Interest repayments are GST free as well as tax deductible for the business use share of the vehicle
  • You may also be able to claim depreciation on the vehicle

The Cons: 

  • This type of loan can come with higher fees and interest rate repayments 
  • The loan may have certian restrictions and not be as flexible as other options, for example, you may not be permitted to make additional repayments

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So what are the application criteria? 

The main thing you need to qualify for a low-doc car loan would be that the vehicle is going to be used for more than 50% business use and with many lenders you'll need to have held your ABN for a minimum of twelve months.

In some rare cases employee's who need to drive as part of their day-to-day role can be provided with a car allowance which could be put towards a low-doc loan rather than a standard car loan.

ABN holders usually need to have had their ABN active for a minimum of twelve months and may be required to be registered for GST for a similar length of time. But this is not a hard and fast rule, so it's worth doing your research to find a financier that will work with your business structure.

It's important to remember that applicants for low-doc loans still need to declare their income, they just don't need to provide the same level of evidence for that income as you an individual would need too.

Low-doc car loans could be an option for those who don't have up-to-date financial statements, or for those who just want an easier, quicker approval as they manage their business day to day.

How do I apply for a low doc car loan?

To apply for a low doc car loan, fill out our online application form or talk to our dedicated team of car finance brokers for more information. 

With access to a panel of over 30 lenders and leading industry experience, we'll help you find the best deal possible for your next car loan. 

Get a quote online or get in touch with us directly. 

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Frequently asked questions

While it will be dependent on the specific lender and their criteria, there are a few things that can help improve the chances of getting approved. For example, buying a newer car, as well as paying a larger cash deposit (reducing your LVR).

An income declaration is a signed form listing your ABN, the loan amount you wish to borrow, as well as your income and assets, "declaring" that you are able to repay the loan. Because self-employed people often lack typical proof of income or other paperwork required for a standard car loan, the declaration of income acts as a substitute. 

It will depend on the lender, but in most cases a balloon or residual payment can be added to reduce your monthly repayments. Check the terms of loans on offer to see if there are flexible payment options like balloon payments. 

Comparing a low doc car loan is just like choosing between any other loan. The most important features to keep in mind include: 

  • Fees, such as setup and ongoing costs or early repayment fees
  • Interest rate - both the headline and the comparison rate
  • Terms of loan - check to see if there are any restrictions and that the terms like the amount you want to borrow and the length of the loan are suited to your financial situation

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