What is a Low Doc Car Loan?
Low doc car loans and No doc car loans are specific vehicle finance products available to borrowers who are self-employed, or own a small trade business, and are similar to an unsecured or secured car loan. The main difference between a standard loan and a low doc car loan is the documentation required by a lender to grant approval.
Low doc (low documentation) and no doc (no documentation) car loans allow self-employed borrowers to finance a vehicle when they cannot provide financial statements or supporting documentation that would be required for standard car loan approval. Instead, lenders will often ask the borrower to sign a declaration of income to verify their financial status.
Who uses low doc car loans?
Low doc and no doc car loans are primarily used by self-employed individuals, sometimes by owners of a small business, and are especially popular with Australian tradies. By definition, they are used by borrowers who cannot provide the necessary documentation for standard car loan approval.
Self-employed professionals who use low doc car loans
|Self-Employed A - F||Self-Employed G - Z|
If you are an Australian tradie looking to finance a vehicle, you may wish to first consider a Chattel Mortgage if the vehicle will be used predominantly for business purposes.
Low-doc loans are particularly useful for self-employed individuals, such as Australian tradies who have trouble providing traditional verification of income.
Differences between a low doc car loan and a no doc car loan
- Low doc loans are available if you are unable to meet qualifying criteria for a standard car loan and cannot provide proof of income and tax returns for the past two years.
- No doc loans are available if you are unable to provide any evidence of your income or supporting documents.
As interest rates and loan flexibility are assessed on the level of risk presented to a lender, low doc loans will have higher interest rates than standard car loans, and no doc loans will have higher interest rates than low doc loans.
Low doc and no doc car loans may have certain terms and conditions attached, and won’t provide the flexibility of standard car finance.
Low doc car loan requirements
Applying for a low doc or no doc car loan will be easiest through non-bank or specialist lenders. You may be asked to sign an income declaration, and you’ll still need to meet basic lender criteria and have:
- An ABN
- Permanent Citizenship or Residency
The most important aspect of your application is proving your ability to meet your repayment obligations. To assess your financial situation, lenders will often ask that alongside an income declaration, you provide detailed information about:
- Your finances
- Your business and how you generate income
- Any assets you own
- Any current loans or debts
Low doc car loan lenders
You can apply with your bank, and low doc car loan lenders or vehicle loan brokers. In some cases, your bank may only require identification and access to your bank account statements to assess your income and application. This can often be a time-consuming process, and made increasingly difficult if you have various streams of income held across accounts with multiple banks.
Low doc car loan lenders allow you to apply online, and offer much faster approval times on applications. They often require fewer supporting documents than banks when assessing an application, and many non-bank lenders can offer conditional, same-day, or next-day approval.
If you are applying online with a non-bank lender, it’s a good idea to prepare some basic information to help streamline the approval process, including:
- Identification and proof of address
- Details of the vehicle you are buying, including its value
- Any details about your business if you are self-employed
- Any agreements or ongoing contracts you may have which provide regular income
If you choose to work with a finance broker, they will charge a small fee in exchange for their services. While this is an additional cost, a broker will advise on:
- The most suitable and affordable vehicle finance option available to you
- The paperwork or details you will need to provide a lender
The value of their fee is in removing stress and doubt from the application and approval process.
How much can I borrow?
Low doc car loans will generally range between $5,000 and $100,000 in Australia, though there are fewer lenders who offer upwards of $75,000. As there is inherently more risk attached to a low doc borrower, the amount required for vehicle finance will be assessed according to your income and credit profile.
Lending criteria and maximum loan amounts vary between lenders, though the most crucial aspect of approving any finance amount is your ability to show a lender you can service the loan amount. Increased stability in your income will assist in securing larger amounts.
Minimum and Maximum Amounts
|Minimum amount||maximum amount|
What is the term?
Most lenders will offer a range of low doc car loans at terms of between two and seven years, though the average term is five years, and will vary depending on the age of the car you wish to finance. The term on your car loan will often also be fixed — i.e. you can’t extend your loan term — and instead may be required to refinance the vehicle should you wish to extend the loan.
Minimum and Maximum Terms
|Minimum term||Maximum term|
|2 years||7 years|
Low doc car finance interest rates
Interest rates on low doc car loans will vary between lenders, and as with other loans will be dependent on a number of factors, including:
- Your personal credit history
- The amount you wish to borrow
- The length of the loan period
- The value of any collateral — if any — used on the loan
Low doc car loans provide access to vehicle finance when the borrower is unable to provide sufficient documentation required for standard loan approval. They are highly popular with self-employed individuals as non-bank lenders offer fast approval and an easy online application process.
- Require less paperwork than a standard car loan
- Often require an income declaration
- Are available from a number of different lenders
- Have terms between two and seven years
- Provide vehicle finance amounts up to $100,000
- May have certain restrictions applied due to increased risk to lenders
Pros and Cons
Low doc car loan FAQ
What does low doc and no doc mean?
Yes, you can get a low doc car loan for business vehicles. If you are planning to use the car for purposes, you can learn more about applying in our guide to Low Doc Business Loans.
Can I get a low doc loan for a private sale vehicle?
Yes, you can use a low doc car loan to purchase a car through private sale. If you want to learn more about how to apply when purchasing directly from a seller, you can read our Private Sale Car Loans guide.
How long does it take to approve a low doc car loan?
If you are applying for a low doc car loan with your bank, the process can take anywhere up to 3 weeks. If you are looking for fast approval, many non-bank lenders provide online applications and offer 24-hour approval.
What income details do I need to provide for a low doc car loan?
When you apply for a low doc car loan, you will often need to sign an income declaration stating how much you earn. You can improve your chances of fast approval by collecting bank statements, information about how you generate income, details of any assets you own, and any current loans or debts which may impact your income and financial stability.