Why get a low doc car loan through Money
Save time
By comparing multiple low doc lenders at once
Get personalised rates
Ones you’re actually eligible for
No credit score impact
Even when comparing lots of options
Get expert support
From application through to settlement
What is a low doc car loan?
A low documentation (low doc) car loan is a car finance option for business borrowers and self-employed people who don't have the standard income documentation typically needed for a traditional car loan application (e.g. payslips).
Low doc car finance can offer quick approval and funding. It works similarly to a standard car loan, where the car serves as collateral for the loan. It can be used to finance vehicles for business use or a mixture of business and personal use (e.g. yellow goods, machinery).
Low doc car finance is also sometimes known as ‘alt doc’ or ‘alternative documentation’ finance.
Key features of low doc car loans
- Borrow from $10,000-$250,000 (amount vary depending on the lender)
- Loan terms from 1-7 years to suit your situation
- Can finance any type of vehicle (cars, utes, commercial vans etc.)
- Available for new or used vehicles; and dealer or private sales
- Usually a fixed interest rate applies
- The finance is usually secured by the vehicle
- Weekly, fortnightly or monthly repayments
- Balloon payment option available
The average low doc car loan amount requested is $33,800, with five years being by far the most commonly requested finance term. Around two-thirds of all low doc car loans are for used vehicles, Money borrower data shows.
Who might need a low doc car loan?
A low doc car loan is a very common option. Here are the types of borrowers it may be suitable for:
Self-employed individuals
Low doc car loans are sometimes simply referred to as self-employed car loans.
Startups & small businesses
Particularly businesses that do not have an extensive revenue history.
Contractors and sole traders
Or anyone else purchasing a vehicle for business purposes and needs an alternative to the standard finance application process.
Benefits and considerations of low doc car loans
What’s good
- Low doc car loans have a streamlined application process, meaning faster approval is often possible.
- Gives access to finance for self-employed individuals and business owners who might not be eligible for traditional finance.
- Costs of a low doc car loan (interest and fees) may be tax deductible based on the portion of vehicle usage that’s for business, according to the ATO.
Possible drawbacks
- The potential pool of lenders is smaller with a low doc car loan. Not all lenders offer them.
- In some cases (not always) interest rates may be higher on low doc car loans, as there is additional risk for the lender.
- The loan terms available to borrowers are sometimes more restrictive, with lower maximum loan amounts and shorter loan durations often a condition of finance.
Low doc versus full doc
Phil Collard, Money's Asset Finance Expert
"Full doc loans are essentially the opposite. Under a full doc business loan, your typical lender will require the borrower to prove they can afford the loan with financials (profit and loss statements and balance sheets), bank statements, invoices and/or accounts receivable/aged debtors ledgers. Your broker will be able to guide you on whether your business qualifies for a low doc loan."
Phil Collard, Money's Asset Finance Expert
What documents do you need for a low doc car loan?
With a low doc car loan, you may still need to provide some credit and financial information that shows you meet the basic eligibility criteria and can afford to repay the loan.
Exact requirements vary by lender but the most commonly requested documents are:
- Proof of identification (100 points of ID)
- An accountant's letter verifying your business income OR a signed income declaration letter
- ABN or ACN registration certificate
- Information about your business activities & how it generates income
- Details about your business expenses, assets and debts
- Registration information & proof of car insurance for the vehicle you're purchasing (note, you will generally need to have a comprehensive policy to cover your vehicle's value – third party car insurance policy will not be sufficient)
What are the interest rates on low doc car loans?
Low doc car loan interest rates are generally fixed and start from 9.50-15% p.a., depending on your credit profile, and the age, make and model of the car you’re financing. Lenders tend to give better rates for newer vehicles.
Certain borrowers applying for a low doc car loan may be eligible for a more competitive interest rate.
Clean credit history
A track record of managing credit with no defaults will be an advantage.
Asset backed
Business owners who own additional assets (e.g. a home) may qualify for lower rates.
Who’s eligible for a low doc car loan?
Low doc car loan requirements and eligibility criteria vary between lenders but generally the requirements include:
- Australian citizenship or permanent residency
- An active ABN or ACN (some lenders might need you to have held the ABN for a minimum of one or two years)
- Meet the lender’s minimum income credit criteria
- Some lenders require that your business be GST-registered (this indicates that your business has an annual turnover of more than $75,000)
- A good credit score — a credit score above 660 is generally considered ‘good’
- The vehicle being financed must be used for business at least 51% of the time
How to apply for low doc car finance through Money
We’re experienced at helping applicants get approved for low doc car loans. Here’s how we can help.
1
Compare low doc car loan interest rates & lenders
We’ll ask for some basic information about your situation, then find personalised low doc car finance quotes. This allows you to compare low doc car loan rates, fees and features without impacting your credit report. We'll also help you estimate your car loan repayments based on different option.
2
Prepare your documentation
Low documentation requirements vary significantly between lenders. This is where our expert guidance can help you navigate your options. We’ll tell you exactly what additional information you’ll need to give us (we’ll have gathered most of the information as part of step 1).
3
Submit your application
We’ll submit your application with your chosen lender. This is another step where we can save you a lot of time. The information in your application will include details about you, your business and the vehicle you’re looking to finance (if you have already found one). If you have already agreed to purchase a vehicle, we’ll include the purchase agreement with your application.
4
Wait for your low doc car loan to be approved
After the lender’s assessment (which involves a credit check) you may be granted conditional approval until you find a vehicle to buy and sign a purchase agreement. Alternatively, your loan may be unconditionally approved based on the vehicle you have agreed to buy. The loan funds will either be paid to your bank account or directly to the seller.
Consider the loan amount carefully
Phil Collard, Asset finance expert
"Before applying, think through what you’re comfortable spending on repayments each month. Just because a lender says you can afford $1,000 per month, it doesn’t necessarily mean that suits your business. For example, you may be operating a seasonal business where some months may be leaner than others, making repayments more of a challenge at certain times. Getting this right from the start help ensure your future borrowing capabilities aren't impacted."
Phil Collard, Asset finance expert
What is a no doc car loan?
As the name suggests, no documentation or no doc car loans don’t require any evidence of income or supporting documents. Generally, the main criteria for eligibility for no doc vehicle finance include:
- You must sign an income declaration form
- Have an active ABN or ACN (for a minimum of 1-2 years)
- Your business must be registered for GST
- In some cases, you’ll need to be a homeowner (i.e. an asset-backed borrower) to qualify for no doc car finance, or you may be asked to provide an upfront deposit.
No doc car loans typically attract higher interest rates than low doc car finance.
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