Whether you’re self-employed or simply low on documentation, a low-doc loan might be the answer to your new car dreams. Here’s a brief rundown on who they’re for and how they work.
What is a low-doc loan?
A low-doc loan is precisely what it says on the tin – a loan requiring low or little documentation. Designed primarily for ABN holders and the self-employed, it’s a great option when you may not have filed a tax return for the previous financial year and/or can’t provide pay slips as proof of regular income.
How does it work?
Low-doc loans use ‘alternative verifications’ to verify income. This allows potential borrowers (most commonly new business owners) to use documents like bank, credit card and BAS statements to support an application for car finance.
Things to keep in mind
- You’ll often find one of the conditions of the loan is that the vehicle must be used primarily for business purposes, but if you’re self-employed, that’s generally not a hassle.
- You’ll also need to supply the requisite proof of ID, along with trust deeds or partnership agreements if applicable to your business.
- Most lenders will require you to have held an ABN for a minimum of 12 months and depending on your financer, you may also need to have been registered for GST for a similar period.
- A clear and positive credit history is also a bonus, and if you’re a property owner and mortgage holder you may find the wheels move more smoothly.
- It also pays to remember that your lender may require an asset as security for the loan (this may be the vehicle itself).
At the end of the day, a low-doc loan is like any other loan in that requirements differ from lender to lender, so contact one of our loan experts before committing to anything. We can find the best lender to suit your situation. A new business shouldn’t preclude you from investing in your very own set of wheels, so don’t be surprised if you find yours is waiting just around the corner.