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One of the most common mistakes among people looking for a personal loan is focusing only on the interest rate first. A better question to ask initially is, ‘which kind of loan can I actually get?’
If you’re self-employed or have an irregular income, the answer may be a low doc personal loan, and NOT a standard personal loan.
In this guide, we’ll explain how low doc personal loans work and who they’re designed for. Then, we’ll explore the fundamentals that you’ll need as well as how to find the best deal.
But first, let’s compare the interest rates you can expect to pay on a low doc personal loan in Australia.
Low doc loan amount | Weekly repayment (9% interest) | Weekly repayment (12% interest) | Weekly repayment (15% interest) |
---|---|---|---|
$2,000 | $9.58 | $10.27 | $10.98 |
$5,000 | $23.95 | $25.67 | $27.45 |
$10,000 | $47.90 | $51.33 | $54.90 |
$15,000 | $71.86 | $77 | $82.35 |
$20,000 | $95.81 | $102.67 | $109.80 |
$25,000 | $119.76 | $128.33 | $137.25 |
$30,000 | $143.71 | $154 | $164.70 |
$40,000 | $191.62 | $205.33 | $219.60 |
$50,000 | $239.52 | $256.67 | $274.50 |
A low doc or ‘low documentation’ personal loan is a type of loan designed for borrowers who don’t meet the standard eligibility criteria for applying for credit with a lender.
With a standard personal loan, the lender will ask for financial documents, including payslips, bank statements and recent tax returns.
Low doc personal loan applications don’t require these documents. Instead, the lender assesses your eligibility in other ways, such as based on whether you have any assets for a secured low doc loan (i.e. a home or car). They’ll also review your credit history.
This makes low doc loans popular with self-employed workers, new business owners and seasonal employees.
Interest rate | 6.75% p.a. to 30.00% p.a. |
---|---|
Loan amount | $2,000 to $50,000 |
Establishment fees | $400 to $500 (depending on loan size, secured loan, unsecured loan) |
Monthly fee | $0 to $15 |
Loan terms | 1 to 7 years |
Early exit fees | $0 to $500 |
Repayment cycle | Weekly, fortnightly, monthly |
Like standard personal loans, you usually have flexibility to use a self-employed personal loan for more or less any purpose. According to Money.com.au research, debt consolidation and financing a home renovation were the most common reasons borrowers requested a low doc personal loan in 2023.
If you’re looking for car finance, you could consider a low doc car loan. Or, if the loan is for a business purpose, there are low doc business loans.
Qualifying for a low doc personal loan can be quite simple. The basic eligibility for low-doc applications requires you to be over the age of 18 and an Australian citizen or permanent resident.
Then, you’ll need to demonstrate that you can afford the repayments, which can be done by providing:
The more documentation you can provide to prove you can comfortably afford to repay the personal loan, the more likely you’ll get approved.
You may also secure a better interest rate. Having a good credit score will also be an advantage.
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GET STARTEDGET STARTEDLow doc personal loans offer an option to borrowers who otherwise mightn’t be able to get a loan. But something to keep in mind is that they are generally a bigger risk for the lender, because the borrower isn’t providing the standard proof of their ability to repay the loan.
This means they often have:
Higher interest rates
Higher fees
Lower borrowing amounts
For example, data from Money.com.au in 2023 shows that the average personal loan interest rate borrowers who are casually employed, without a long-term stable income, is 16.15% p.a. This is in contrast to an average of 13.83% p.a. for borrowers who are employed full-time.
Lenders like to minimise risk and uncertainty wherever they can. If you can remove some of the risk for them, you could get a lower interest rate on your low doc personal loan.
Here are some options self-employed borrowers can consider:
If you own an asset (a car, house, shares) the lender may accept this as security for the loan.
You can provide a personal guarantee (a written declaration) to the lender about your ability to repay the loan.
Do a free credit score check and if you need to, take steps to improve your score before applying.
You can ask someone you trust to act as a guarantor for the loan.
If you can afford the higher repayments, agree to a shorter loan term so you’re paying off the loan sooner. Be sure to calculate what your personal loan repayments will be over different loan terms.
Most lenders offer a personal loan for self-employed low doc borrowers. This includes the major banks, credit unions, online lenders and specialist lenders. However, to be eligible for a low doc loan with a traditional lender, like a bank or credit union, you’ll generally need to have a good credit score.
If you’re struggling to find a suitable lender, a personal loan broker may be able to help you find one.
The process of applying for a low doc loan is generally straightforward and similar to that of applying for a standard personal loan. Each lender’s application process may differ slightly but are more often than not approved quickly online, so long as you fulfil the lender’s criteria.
You should be able to apply for a low doc personal loan between $2,000 and $50,000, but a few lenders offer as much as $80,000. It will ultimately depend on your personal circumstances and how strong your application is (credit score, proof you can repay the loan, etc.), as well as the lender’s maximum loan amount.
Lenders generally ask to see bank statements to verify your expenses and that you're able to afford the loan. But it can be possible to get a low doc loan without bank statements provided you can demonstrate to the lender overall that you are eligible.
Make sure do thorough checks on the vehicle if you're getting a loan to buy through a private sale.
You may be able to get a low doc personal loan if you have bad credit. But you might have a better chance of being approved through a specialist bad credit personal loan provider.
Yes. Low doc loans are sometimes called self-employed loans. To be approved, you will still need to provide a minimum level of documentation, which might include recent tax returns and personal ID.
Yes, it may be possible to get an unsecured personal loan as a low-doc borrower. But if you can provide security on the loan, it may be easier to get approved and find a better deal.
Generally, low doc personal loans have higher interest rates than standard personal loans. Lenders charge higher rates to cover the increased risk of default.
It’s generally pretty rare for lenders to offer no doc personal loans in Australia. When assessing your personal loan application, most lenders will want at least some information about who you are, your business and how you will be able to afford the loan.
Let us know who you are and what you're looking for. A little bit of information goes a long way in helping us find the right loans for you.
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The great thing about personal loans is they can fund almost anything. They are perfect when you need that bit extra to cover expenses, start a project or reset your finances to get back on track.
*Information about comparison rates: Comparison rates are designed to allow borrowers to understand the true cost of a loan by taking into account fees and charges, the loan amount and the term of the loan. The comparison rate is based on an unsecured fixed rate personal loan of $10,000 over 3 years. WARNING: Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.