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What is a low doc car loan?
Low documentation (low doc), alternative documentation (alt doc) and no documentation (no doc) car loans are car finance options for business borrowers who don't have the standard income documentation typically needed for a traditional car loan application (e.g. payslips or tax returns).
Borrowers who may need to consider a low doc car loan include:
- Self-employed individuals — low doc car loans may sometimes be referred to as ABN car loans or self-employed car loans
- Startups & small businesses (business borrowers can also apply for a low doc business loan)
- Contractors
- Sole traders
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 both business and personal use, and business equipment (e.g. yellow goods, machinery).
Low doc car loans generally present a higher risk to the lender, and will therefore come with higher interest rates than standard full doc car loans.
What documents do you need for a low doc car loan?
Documentation requirements vary between low doc lenders, but generally include:
- Proof of identification (100 points of ID)
- An accountant's letter verifying your business income OR a signed income declaration letter
- Business bank statements for the last three months OR Business Activity Statements (BAS) if your business is registered for GST
- ABN or ACN registration certificate
While low doc car loan applications require minimal documentation, you will still need to provide some credit and financial information that shows you can repay the loan in full, including:
- Information about your business activities & how it generates income
- Details about your business expenses & debts
- A list of other assets you own
- The vehicle’s registration information & proof of insurance
Low doc car loan versus standard loan documentation requirements
Below shows the difference in documentation requirements between a standard and low doc car loan. Please note that documentation requirements vary between lenders.
Standard car loan
- 2-3 most recent payslips or an income statement (sometimes called a group certificate)
- Employment contract & 3 months bank statements (for new employees)
- ATO notice of assessment (depending on the lender)
- Tax returns or BAS statements (if you’re self-employed)
- Proof of residence (e.g. rates notices, utility bill or tenancy agreement)
Low doc car loan
- ABN or ACN registration certificate
- An accountant’s letter confirming your business income or a signed income declaration
- Recent business bank statements or BAS statements
- Proof of residence (e.g. rates notices, utility bill or tenancy agreement)
Low doc car loan features
1
Minimum or no financials required
2
Borrow up to $200,000, depending on the lender. The average low doc loan request is around $36,000, according to Money borrower data
3
Loan terms from 1-7 years. Our data shows most borrowers choose a five-year term for their low doc car loan
4
Can be used for new or used vehicles. About two-thirds of loc-doc loan requests are for a used car, our analysis shows
5
Weekly, fortnightly or monthly repayments
6
Balloon payment options available to reduce the regular repayments
7
Can be used for cars bought from a dealership or through a private sale
What are the interest rates on low doc car loans?
Low doc car loan interest rates are generally fixed from 7.50-15% 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.
Additionally, certain borrowers may be eligible for a more competitive interest rate. Those include:
Businesses with a clean credit history and who can provide strong evidence they can afford the repayments
Business owners who own a home (i.e. asset-backed borrowers)
Best low doc car loan rate comparison
Low doc car loan | $10,000 |
|---|---|
Monthly repayments with 7.50% p.a. interest rate | $200.38 |
Monthly repayments with 9.50% p.a. interest rate | $210.02 |
Monthly repayments with 11.50% p.a. interest rate | $219.93 |
Low doc car loan | $20,000 |
Monthly repayments with 7.50% p.a. interest rate | $400.76 |
Monthly repayments with 9.50% p.a. interest rate | $420.04 |
Monthly repayments with 11.50% p.a. interest rate | $439.85 |
Low doc car loan | $30,000 |
Monthly repayments with 7.50% p.a. interest rate | $601.14 |
Monthly repayments with 9.50% p.a. interest rate | $630.06 |
Monthly repayments with 11.50% p.a. interest rate | $659.78 |
Low doc car loan | $40,000 |
Monthly repayments with 7.50% p.a. interest rate | $801.52 |
Monthly repayments with 9.50% p.a. interest rate | $840.07 |
Monthly repayments with 11.50% p.a. interest rate | $879.70 |
Low doc car loan | $50,000 |
Monthly repayments with 7.50% p.a. interest rate | $1,001.90 |
Monthly repayments with 9.50% p.a. interest rate | $1,050.09 |
Monthly repayments with 11.50% p.a. interest rate | $1,099.63 |
Low doc car loan | $60,000 |
Monthly repayments with 7.50% p.a. interest rate | $1,202.28 |
Monthly repayments with 9.50% p.a. interest rate | $1,260.11 |
Monthly repayments with 11.50% p.a. interest rate | $1,319.56 |
Low doc car loan | $70,000 |
Monthly repayments with 7.50% p.a. interest rate | $1,402.66 |
Monthly repayments with 9.50% p.a. interest rate | $1,470.13 |
Monthly repayments with 11.50% p.a. interest rate | $1,539.48 |
Low doc car loan | $80,000 |
Monthly repayments with 7.50% p.a. interest rate | $1,603.04 |
Monthly repayments with 9.50% p.a. interest rate | $1,680.15 |
Monthly repayments with 11.50% p.a. interest rate | $1,759.41 |
Low doc car loan | $90,000 |
Monthly repayments with 7.50% p.a. interest rate | $1,803.42 |
Monthly repayments with 9.50% p.a. interest rate | $1,890.17 |
Monthly repayments with 11.50% p.a. interest rate | $1,979.33 |
Low doc car loan | $100,000 |
Monthly repayments with 7.50% p.a. interest rate | $2,003.79 |
Monthly repayments with 9.50% p.a. interest rate | $2,100.19 |
Monthly repayments with 11.50% p.a. interest rate | $2,199.26 |
| Low doc car loan | Monthly repayments with 7.50% p.a. interest rate | Monthly repayments with 9.50% p.a. interest rate | Monthly repayments with 11.50% p.a. interest rate |
|---|---|---|---|
$10,000 | $200.38 | $210.02 | $219.93 |
$20,000 | $400.76 | $420.04 | $439.85 |
$30,000 | $601.14 | $630.06 | $659.78 |
$40,000 | $801.52 | $840.07 | $879.70 |
$50,000 | $1,001.90 | $1,050.09 | $1,099.63 |
$60,000 | $1,202.28 | $1,260.11 | $1,319.56 |
$70,000 | $1,402.66 | $1,470.13 | $1,539.48 |
$80,000 | $1,603.04 | $1,680.15 | $1,759.41 |
$90,000 | $1,803.42 | $1,890.17 | $1,979.33 |
$100,000 | $2,003.79 | $2,100.19 | $2,199.26 |
Who’s eligible for a low doc car loan?
Low doc car loan requirements and eligibility criteria vary between lenders but generally include:
- Australian citizenship or permanent residency
- Have an active ABN or ACN (some lenders might need you to have held the ABN for a minimum of one or two years)
- You must be able to show that you 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 must be used for business at least 51% of the time
According to commercial lending expert Edward Clark, your business credit history is a major factor in determining if you qualify for low doc car finance.
“Having an ABN and a couple of bank statements isn’t always enough to qualify for low doc finance. Most lenders want to see that you have an active credit file, either with a current loan you're repaying or recently paid debts. From a low doc lender’s perspective, this is a strong signal of serviceability.”
Edward Clark, Stratton Finance Commercial Franchisee.
How to apply for low doc car finance
1
Compare low doc car loan interest rates & lenders
Consider getting personalised low doc car finance quotes from different lenders through a finance broker. This will allow you to compare low doc car loan rates, fees and features without impacting your credit report. Keep in mind that your individual rate usually ends up being different to the lender’s advertised rate.
2
Prepare your documentation
While a low doc car loan requires less documentation than a standard car loan, you'll still need to submit some paperwork. This includes a self-signed income declaration form or an accountant's letter confirming your business income, plus your ABN and business registration information and bank or BAS statements. Based on analysis by Money.com.au, low documentation requirements vary significantly between lenders.
3
Submit your application
You can typically apply for a low doc car loan online through your lender's application portal. You’ll need to input your personal details, and provide some business information, including how long it’s been registered. You’ll also be asked about the type of vehicle you want to finance (including age, make and model) and the portion of its usage for business purposes. A lending specialist will generally call you afterward to discuss your application (and ensure the product is right for you). You can upload your financial documentation via the relevant portal if you meet the lender's preliminary requirements. In the meantime, your lender will also conduct a credit check.
4
Wait for your low doc car loan to be approved
You may be granted conditional approval until you find a vehicle to buy and sign a purchase agreement (this is optional). Alternatively, you could sign a contract to purchase subject to finance and skip to unconditional approval. The lender will verify that your vehicle meets the finance eligibility criteria and approve your finance application if everything checks out.
Who uses low doc car loans?
The majority of borrowers requesting a low doc car loan (55%) are either self-employed, or working casually or part-time, Money data shows. Commonly, these are tradies or seasonal workers.
If you're a business owner planning on using the car for your business at least half the time, you might be eligible for a special type of car loan called a chattel mortgage. This may have additional tax benefits (e.g. interest on the loan may be tax deductible).
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 payslips to provide to the lender.
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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