If you are a small business owner or self-employed individual, you might find it difficult to access certain financing options due to your financial history. The good news is there’s a loan option that can help you achieve your goals—a low doc car loan.
Understanding low doc car loans
A low doc car loan has less barriers for application compared to a standard car loan. This type of loan requires fewer financial documents compared to what is typically expected from a borrower. Also, the vehicle purchased using this loan type must be used for business or work purposes over 50% of the time.
This financing option is great for people who don’t have regular income or can’t produce extensive documentation such as tax returns and financial statements. People who own small businesses, entrepreneurs, freelancers, contractors, and the like can easily qualify for a low doc loan.
With a low doc car loan, people will have more access to the loans they need for their business without needing heaps of documents. As long as the vehicle you purchase meets the required criteria, you are eligible to apply for a low doc loan.
Low doc car loans can be beneficial for your small business
If you have a small business, a low doc car loan can be used to your advantage. Here are some of the many benefits you can expect from a low doc car finance:
-
You can get a loan with fewer documents. This is great for fledgling businesses or those with a rocky history. Your bad credit history or lack of credit history won’t be an obstacle to getting the car loan you need.
-
You may get faster loan processing and approval times. Since there won’t be a lot of documents to go through, the low doc loan process may be faster compared to a traditional loan. This means you’ll likely get the funds you need for your car purchase much quicker too.
-
You may be eligible for tax benefits. Because low doc loans are used for business vehicles, you may get certain tax incentives. The interest repayments may be GST-free and tax-deductible.
-
You can apply online or over the phone. When applying for a low doc loan, most lenders allow borrowers to apply through calling or an online application. This provides convenience and an easy solution for those who can’t take off for a day to settle their loan application in person.
Eligibility requirements for a low doc car loan
When applying for a low doc loan, you will still need to pass a few documentation requirements. The requirements may be different depending on the lender, but you will likely need the following:
-
Name, address, proof of identification
-
ABN (Australian Business Number)
-
Assets, liabilities and other finances for self-employed individuals and freelancers
-
Car value and other details
Take note, lenders may require other documents to determine your true financial situation.
Know how low doc loans work
Low doc car loans work like a regular business car finance. Once approved for a low doc loan, you’re provided the funds to purchase a business vehicle. After, you will have to pay back the loan through regular installments over the loan term.
The loan amount and interest rates for low doc loans vary from lender to lender. Generally, lenders see low doc car loans as riskier compared to a regular car loan. It is likely that low doc loans will have higher interest rates to compensate for the increased risk. It is always best to discuss the loan terms with a lender or broker before deciding.
These low doc loans also come in both secured and unsecured types. With a secured low doc loan, you pledge an asset as collateral. Because of this, some lenders may allow you to borrow a larger amount. Meanwhile, an unsecured low doc loan requires no asset to be put as a guarantee. However, these loans usually have lower borrowing limits.
The kind of low doc finance you should apply for depends on your financial situation and the amount you want to borrow, amongst other factors.
Finding the best low doc car loan
Consider all your options when applying for a low doc car loan. Shop around and check out different lenders to compare rates, fees, charges, and terms. Use an online car loan calculator to get a better idea of your potential repayments. Try negotiating for the best loan deal and repayment options, as well.
Check for any restrictions imposed by the lender on the low doc car loan. Read the lenders’ policies and conditions carefully to ensure they suit your needs. If you want an easy and streamlined low doc loan search, get in touch with Aussie Car Loans.
At Aussie Car Loans, we can help you find the best low doc car loan for your small business. Let’s discuss your business car finance needs today. Call 1300 889 669 or submit an application to get started.
FAQs
What is a low doc car loan, and how does it differ from a traditional car loan?
A low doc car loan is a type of loan that requires minimal documents from applicants. Unlike traditional car loans, borrowers won’t need extensive financial documentation to be eligible for a low doc car loan.
Who is eligible to apply for a low doc car loan?
Small business owners, self-employed individuals, entrepreneurs, contractors, freelancers, and sole traders are all eligible to apply for a low doc car loan.
What documents do I need to provide for a low doc car loan application?
Documents you may need to provide for a low doc car loan application are proof of identification, an ABN, assets, liabilities, and details about the car you’d like to purchase.
Are there any tax benefits associated with using a low doc car loan for business purposes?
The interest on your low doc car loan and costs associated with the car may be tax deductible.
What are some alternative financing options for small businesses if a low doc car loan is not suitable for them?
A no doc car loan may be suitable for small businesses that still aren’t able to provide the documentation required. With a no doc car loan, borrowers aren’t required to provide proof of income on their application. Although this is an option available, very few lenders in Australia offer this type of loan.
