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What is a low doc car loan?
Low doc (low documentation) and no doc (no documentation) car loans are car finance options generally used by borrowers with an irregular income who can't meet the standard eligibility criteria for traditional bank loans.
Low doc car loans are commonly used by people who are self-employed. In fact, you’ll sometimes see them referred to as car loans for ABN holders, or simply self employed car loans.
The main difference between standard car loans and low or no doc car loans is what you need to give the lender when applying.
Instead of pay slips, low doc lenders will often ask you to sign a declaration of income to verify your income. Or this can be provided by your accountant.
You can also provide a Business Activity Statement (BAS) or other tax records if you have access to them.
What do low doc car loans offer?
Once you're approved, low doc car loans work similarly to standard car loans.
- Terms of 1-7 years typically: Money.com.au data shows most borrowers choose a five-year term for their low doc car loan.
- Can be used for new or used vehicles: About two-thirds of loc-doc loan requests are for a used car, our analysis shows.
- Can be used for cars bought from a dealer or through a private sale
- Borrow up to $200,000 depending on the lender: The average low doc loan request is around $36,000.
- Weekly, fortnightly or monthly repayments
- Balloon payment option may be available
- Can come with upfront and ongoing fees
Can you get a low doc car loan without bank statements?
When you apply for a standard car loan, lenders usually want to look at your bank statements.
But with a low doc loan, you won’t necessarily need to provide bank statements.
As long as you can demonstrate overall that you will be able to afford the repayments, you may still be approved.
What DO you need to get a low doc car loan?
What’s required for a low doc or no doc car loan varies depending on which lender you apply with.
But generally the minimum requirements are:
- You’re over 18 years of age
- You’re an Australian citizen or permanent resident
- You’re an ABN holder (with some lenders you might need to have held the ABN for a minimum of 1 or 2 years)
- Some lenders will also require you to be registered for GST
You’ll ALSO be asked to provide information about:
- The vehicle the loan is being used to purchase and how it’s insured
- Your business and how it generates income
- Any other assets you own
- Any loans or other debts you have
The more information you can provide to your lender as proof that you’re able to repay the loan, the more likely it is you’ll get approved.
What else can you do to get approved for a low doc car loan?
Lenders who offer low doc car loans still care about risk. Anything you can do to minimise the risk in the lender's eyes will help your chances of approval.
It will also help you get a better deal on your car loan.
These are some of the steps I've seen help low doc borrowers get their car loan application across the line:
- Apply for car loan pre-approval to get an early idea of where you stand with your lender.
- Buy a car that’s eligible for a secured car loan as this reduces the risk for the lender.
- Offer to pay a deposit on the vehicle. This lowers your loan-to-value ratio and is another way of minimising risk for the lender.
- Apply with the help of a guarantor who will agree to take responsibility for your loan if you become unable to repay it.
- Check your credit score before applying and take steps to improve it if needed.
What interest rate can I get on a low doc car loan?
This will depend on in your application, plus what’s in your credit history.
Some low doc car loan borrowers with a good credit history who can provide strong evidence that they can afford the repayments may be eligible for very competitive car loan rates. Potentially as low as those on ‘standard’ car loans.
If you have bad credit you can consider a bad credit car loan.
But low doc car loans typically come with higher interest rates. Because overall they are seen to be riskier for lenders.
The key is still to compare options so you can find the best rate.
You certainly shouldn't be afraid to shop around just because your income isn’t as regular as some banks would like.
The table below shows the potential impact of the loan you choose on your monthly repayments based on different interest rate levels.
You can check what your regular repayments and total loan costs will be based on other loan amounts and interest rates with our car loan calculator.
Best low doc car loan rate comparison
| Car loan amount | Monthly repayment at 8% interest | Monthly repayment at 10% interest |
|---|---|---|
$10,000 | $202.76 | $212.47 |
$20,000 | $405.53 | $424.94 |
$30,000 | $608.29 | $637.41 |
$40,000 | $811.06 | $849.88 |
$50,000 | $1,013.82 | $1,062.35 |
$60,000 | $1,216.58 | $1,274.82 |
$70,000 | $1,419.35 | $1,487.29 |
$80,000 | $1,622.11 | $1,699.76 |
$90,000 | $1,824.88 | $1,912.23 |
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Who uses low doc car loans?
Money.com.au data shows the majority of borrowers requesting a low doc car loan (55%) are either self-employed, or working casually or part-time. Commonly these are tradies or seasonal workers.
If you’re a business owner and planning on using the car for your business at least half of the time, you might be eligible for a special type of car loan called a chattel mortgage. This may have some additional tax advantages.
A low doc car loan can also be an option for full-time employees in certain circumstances, such as if you've just started a new job and don't have multiple pay slips to provide to the lender.
Differences between a low doc car loan and a no doc car loan
Low doc car loans are used when you are unable to provide the standard documentation required for a typical car loan. But you can provide some documents.
No doc loans are used when you are unable to provide any evidence at all of your income or supporting documents.
No doc car loans can be more difficult to come by and typically attract a very high interest rate.
Low doc car loan FAQ
Get help from a real-life Money Matchmaker® from start to finish.
How much deposit do I need for a low doc loan?
It’s usually not a requirement to provide a deposit for the car when you’re applying for a low doc car loan. However, it can sometimes help get your application approved as a deposit reduces risk for the lender by lowering your loan-to-value ratio. Providing a deposit may also mean you can negotiate a lower interest rate.
What are the benefits of a low doc car loan?
Low doc car loans offer an alternative to borrowers who otherwise would not be eligible for finance via a traditional lender. In the right situation, a low doc car loan can offer quick approval and funding. This can be particularly important for self-employed people who rely on having access to a vehicle for their work.
Do I need to apply for a low doc car loan through a broker?
It’s not strictly necessary to apply for a low doc car loan through a finance broker, but it can be a good idea if you’re not familiar with car finance and are short on time. A car loan broker will have knowledge of a wide range of lenders and their eligibility criteria. They will be able to advise you on which providers may be most suitable and will offer you the best deal.
Can you get a car loan without proof of income?
Generally some proof of income is necessary if you are applying for a car loan. Lenders are required to make reasonable efforts to confirm that the loan is not unsuitable for you. In most cases, that means checking that you earn enough to be able to afford the repayments.
What is a good used car loan rate?
Currently, used car loan interest rates starting from around 7% are among the most competitive available. But remember, the older the car you’re buying, the higher your rate is likely to be. Your credit score and other factors to do with your financial situation can also impact your used car loan interest rate.
What is the average used car loan amount?
Money.com.au data shows the average used car loan amount requested in 2023 is $32,528 for borrowers buying a car through a dealer. For private sale car loans, the average is $26,396.
What is the maximum age of car for a used car loan?
The maximum age of a car for a used car loan varies depending on the lender you apply with. It can range anywhere from five to 15 years. The maximum is often based on the age of the car at the end of the loan term, so if you're buying an older car, you may only be able to apply for a short loan term.
Shopping around for the right loan can save you thousands of dollars in interest and fees.
Car Loans guides and resources
Where to next? Read our other car loan guides to understand more about your options for financing your next car.
Written by
Loans Expert
Shaun McGowan
Reviewed by
Editor
Sean Callery
AS FEATURED IN
*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 $30,000 over 5 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.
