Loan Series: Low Doc Loans for Car Purchases
Low doc car loans are the saving grace for small business owners and self-employed Australians. If you’re after a loan for a company or personal vehicle, you won’t need to jump through hoops to track down the necessary paperwork involved in taking out a full doc loan.
As the name suggests, a low documentation loan is aimed at people who cannot provide the required paperwork (tax returns and financial statements) needed to apply for a traditional loan.
Who can get one?
Due to changes to the National Consumer Credit Protection Act, lenders will only allow self-employed borrowers or investors to borrow, as they do not have access to a regular PAYG income. This is due to these borrowers having more legitimate reasons as to why they cannot prove their income, for example – not completing a recent tax return.
Low doc loans are considered risky, and lenders who offer them may charge higher fees and rates to offset the uncertainty of your position.
What are the basic requirements?
There are a few basic requirements needed when taking out a low doc loan. These include:
• An assets and liabilities statement
• An ABN registered for at least two years
• You must own a property
How much can you borrow?
The great thing about a low doc loan is you still have the same borrowing power as full doc clients. Before choosing a lender, ensure you know the loan amount, terms they offer and if they meet your needs. Car loans typically range from $3,000 to $10,000 and can last between one and seven years.
What should I consider before applying?
Due to the nature of the low doc loan, it is up to you to determine what you can and can’t afford. This depends on the stability of your income. You may also want to ask your broker about restrictions on repayments for low doc loans. Some lenders have tighter restrictions on making extra repayments.
Should you seek professional advice?
With many lenders offering multiple deals and packages, there is an overwhelming amount of information circulating the market. With years of experience, a mortgage broker can hand-pick the package that best suits your circumstances, and you won’t have to lift a finger.
At Select, we provide free, no-obligation and quality advice so you can reach your financial goals. If you are self-employed or a small business owner, we can help you get the car you need without the extensive documentation. Give us a call on (08) 9417 3399 to speak with one of our brokers.