Getting any sort of loan product when you’re self-employed can be difficult, and a car loan is no different. Check out the loan options available, the minimum requirements, restrictions, and what to consider before applying here.

Can you get a car loan if you are self-employed?

It’s possible to get a car loan if you are self-employed, however, the range of options may differ slightly compared to those who aren’t self-employed. What you first need to be established is whether the vehicle will be used for business purposes, and if so, what proportion as a percentage would be for business usage.

What are the car loan options if you are self-employed?

If the vehicle will be used for more than 50% of business use, there are a range of different finance types that could be utilised, the most common being the Chattel Mortgage and a commercial hire purchase agreement. These loans are not regulated by the National Consumer Credit Protection Act (NCCPA) which can make the application process simpler and faster.

If the vehicle is predominantly for personal use, then self-employed borrowers may opt for a Consumer Loan, which is regulated under the NCCPA. A different level of disclosure is applied to regulated loans, which are in place to protect the consumer and help them understand the loan prior to entering into any formal agreement. This can introduce additional complexity for the self-employed.

For an unregulated loan, lenders may be more relaxed as the same disclosure and requirements are not required for a business use loan, as they are not regulated under the NCCPA. Some lenders will offer no-doc car loans or low-doc car loans, where the borrower won’t have to provide any proof of income in certain circumstances. For example, if there is significant equity from the trade-in, a cash deposit, if the business owns real property, or if the business has repaid a similar loan in the past. These are often the most popular option for people who are self-employed.

What are the minimum requirements if applying for a car loan when self-employed?

The minimum requirements for a car loan, if you’re self-employed, will typically require you to provide proof of income in the form of tax returns for the last financial year as well as financial statements if available. For a regulated consumer loan, full proof of income will usually be required to assess the loan for any client, whether they are an employee or self-employed.

Lenders may require additional documentation to be certain the income and expenses are accurate to assess affordability. For a self-employed client, this could include two years of individual tax returns if they are a sole trader or additionally include financial statements if the business is arranged as a company or trust.

Are there any car loan restrictions when self-employed?

If you’re self-employed, there may be restrictions on your car loan, but this will come down to the lender. For example, if you want to make extra repayments on your loan, the loan may prevent you from doing this. Alternatively, they may have a maximum amount of extra repayments or a maximum amount you can make in extra repayments. They might even charge you a fee for any of these options.

Low doc loans may also come with greater restrictions than a regular loan. For example. you might only be able to use the loan amount to fund the purchase of the vehicle and nothing else. You might also not be allowed to make additional repayments.

What to consider before applying

If you’re opting for a low-doc loan and you’re self-employed, consider whether you can actually afford the loan. Ensure you have budgeted accordingly to understand whether you can actually afford the loan.

If you’re planning on making extra repayments or potentially paying off the loan early, check the loan terms to see if the lender will allow this. If they don’t, it could end up costing you more down the track, or you might be stung with fees you weren’t aware of.

If the car is for business purposes, consider the burden it will put on your business. If you default on the loan, your business and its assets could be at risk of getting seized.

How to apply

The application will differ between lenders and your situation, but the following process will give you a rough idea of what it might look like:

  1. Decide on a loan type (low-doc, chattel mortgage, commercial hire agreement, consumer loan).

  2. Evaluate the market and decide on a lender that best suits your needs, as well as a loan that does the same.

  3. Submit the relevant paperwork the lender requires (proof of ID, details of car, proof of income, tax statements, other business details).

  4. Wait for the lender to evaluate your loan application. This could take anywhere from 24 hours to a number of weeks.

  5. Provided the lender approves your application, they will wire the money to the necessary party and/or account, and you’ll soon be in possession of your new vehicle.


What is a low-doc car loan?

A low-doc car loan means you don’t have to provide as much paperwork as typically required when applying for a car loan. This can be helpful for people who are self-employed, as they often don’t have the necessary documents normal employees have, like payslips.

What are the features of low-doc car loans?

Low-doc car loans often have higher interest rates as they are considered higher risk by the lender. This is because they have less financial information and are getting a less rounded picture of your finances. They also typically have higher fees than normal car loans, but can be easier to obtain. However, they are often more restricted in their terms, such as the loan length, loan size, and the ability to make extra repayments.