Who uses them
Where to apply
How to compare loans
A low-doc personal loan can provide access to finance if you’re self-employed, don’t have the documents required to apply for a secured personal loan, or can’t prove your income to a lender through the standard application process.
What is a low-doc personal loan?
A low-doc personal loan is similar to a standard personal loan with one key difference. They’re designed for borrowers who may not be able to produce all the usual documentation to prove their income, such as:
- Self-employed people
- Business owners
- People who have all their wealth and income tied up in investments
- People who have inconsistent income, such as seasonal workers
Is a low-doc personal loan right for me?
Low-doc loans may be an option if you don’t have all the normal proof of income required by lenders, like payslips from an employer or recent tax returns.
On the other hand, because low-doc borrowers can secure finance with limited documentation, lenders often charge higher interest rates and fees to justify the increased risk in lending money. These loans may also have fewer features and less flexibility than other personal loans.
You can use the Personal Loan Calculator to estimate repayments on personal loans.
Where to apply for a low-doc personal loan
The majority of personal loan lenders offer low-doc personal loans or self-employed loans. If you are unable to make a strong application, it may be better to apply with a non-bank lender as they often have more-relaxed credit policies than major banks.
Most lenders offer both unsecured and secured personal loans - secured loans will generally be easier to approve, as collateral will reduce risk to the lender. Many lenders allow online applications, while others require you to visit a branch.
What documents do I need to apply for a low-doc personal loan?
Applying for a low-doc personal loan may not require the standard documentation for approval, but you’ll still need to demonstrate to your lender that you can repay your loan amount. You may be asked to provide:
- Two years of tax returns and/or notices of tax assessment from the Australian Taxation Office.
- Any recent financial statements that show your business’s profits and losses.
- Company Information if you are a business owner. That includes your ABN and business address.
- Personal ID, such as a passport or Australian driver licence.
- Proof of any other income you have i.e. rental property or investment income.
- Recent bank statements for both your personal and business accounts.
As a general rule, the more information you can provide a lender, the stronger your application will be. If you’re only able to provide limited documentation you may still be able to secure a loan, but it could have a higher interest rate.
How to compare low-doc personal loans
When comparing low-doc personal loans, you’ll want to look closely at:
- Interest rates
- Loan terms
- Loan features
As a business owner or freelancer your income may be inconsistent so look for features such as redraw facilities and lines of credit. These allow you to make additional repayments when you can to reduce interest charges, then withdraw them when you need the money to smooth your cash flow.
When comparing loans look at the comparison rate, not just the interest rate. The comparison rate expresses the true cost of a loan and includes both interest and fees.
Low-doc personal loan amounts
Low-doc personal loans are commonly available for amounts between $2,000 and $50,000, but a few select lenders off as much as $75,000.
The larger the loan amount is, the more strict lenders will be when assessing your application so it’s best not to borrow more than you need.
If you aren't able to access the finance you need, you can always look to refinance a personal loan once you're able to provide the additional documents required for a standard loan.
A low-doc personal loan may be ideal for self-employed people, business owners, seasonal workers and others who can’t provide the normal documentation required by lenders. However, because these loans are considered higher risk by lenders they may have:
- High interest rates
- High fees
- Low maximum loan limits
- Limited features
Pay close attention to the loan’s interest rate and fees, and take time to shop around and find the best deal.
Low-doc personal loan FAQ
Can I get a low-doc personal loan if I have bad credit?
You may be able to get a low-doc personal loan if you have bad credit, however each lender’s credit policies will apply.
Can I get a low-doc personal loan if I’m self-employed?
Yes, low-doc personal loans are specifically designed for those who aren’t able to provide the usual income verification documents such as self-employed people. In fact, low-doc loans are sometimes called self-employed loans. Keep in mind that you will still have to provide a minimum level of documentation for low-doc loans, which might include recent tax returns and personal ID.
Is it possible to get an unsecured low-doc personal loan?
Yes, it may be possible to get an unsecured low-doc personal loan. However, since banks view these as riskier they may assess your application closely and apply strict credit criteria.
Do low-doc personal loans have higher interest rates?
Generally, low-doc personal loans have higher interest rates than normal personal loans. This is because lenders deem them riskier than normal personal loans and charge higher rates to cover the increased risk of default.