Understanding Low Doc ABN Car Finance

Low Doc ABN Car Finance provides ABN holders with a convenient and accessible financing option to purchase vehicles for business use. Businesses often need vehicles to do their work efficiently. From delivering goods, meeting clients, or carrying all necessary tools and equipment to job sites. Having reliable transportation is crucial for success.

Sometimes, getting a loan for a vehicle can be tricky, especially for businesses with an ABN. That is where low doc ABN car loans come in. In this blog, we’ll explore what Low Doc ABN car loans are and who is eligible. Additionally, the documentation required, the pros and cons and how they compare to traditional car loans. Finally find out how to apply for and get the best low doc car loan for your business.

What is a Low Doc ABN Car Loan?

Low doc ABN car loans are a car loan option for self-employed individuals or businesses. They are especially beneficial to those who may have difficulty providing the extensive financial documentation typically required for traditional car loans. Low doc essentially means low documentation. Consequently, these loans make it easier for businesses to purchase the vehicles they need without extensive paperwork. These loans are particularly suitable for sole traders and small business owners with irregular income streams who may not have the standard documentation, such as pay stubs or tax returns.

Who is eligible for Low Doc ABN Car Finance?

To qualify for a low doc car loan, applicants must hold an Australian Business Number (ABN). Your business structure can be a self-employed sole trader, partnership, company, or trust.  Each lender has different requirements as to how long your ABN has been running and whether it is GST registered.

The second requirement is that the vehicle being purchased must be used predominantly for business use.  The ATO defines ‘predominately’ as greater than 50%. 'Business use' is defined as a vehicle used to generate income. For example, a delivery driver uses the vehicle as part of day-to-day operations to make money. A trades person uses a Ute to transport tools required to enable them to work. However, a hairdresser using a car to drive to and from their salon is not using the vehicle to generate income. If the hairdresser was a mobile hairdresser, then the vehicle could be claimed as business.

Thirdly, a good credit history assists in getting a low doc car loan at a great rate with few income verification requirements. While low doc loans are more flexible with documentation, lenders still usually require a good credit history.

Documents Required

Low doc car loans, while requiring less documentation compared to traditional loans, still necessitate some proof of income to assess the borrower's ability to repay the loan. Typically, lenders offering low doc car loans accept alternative forms of income verification. These may include an accountants letter, bank statements and/or a Business Activity Statement (BAS). Find out more about documentation requirements here.

Pros and Cons of a Low Doc ABN Car Finance

The are a number of advantages to using a low doc ABN car loan to purchase a car for business use.

Pros

1. Flexibility in Income Documentation: Low doc car loans offer ABN holders flexibility in documenting their income. They do not require extensive paperwork like traditional loans. Lenders accept alternative forms of income verification such as self-declarations, business activity statements (BAS), or bank statements.
2. Tailored Loan Options for Varied Business Needs: Low doc car loans can meet the diverse needs of businesses with ABNs. They offer customized loan options, allowing ABN holders to choose repayment terms, loan amounts, and features that best suit their specific business requirements. For examples, by including a balloon payment in your loan structure you can reduce the loan repayments. The ‘balloon’ lump sum payment is due at the end of the loan term. Often business owners will sell the car and payout the balloon with the proceeds. They then upgrade their business vehicle to suit the growing needs of their business.
3. Faster Processing Times: Compared to traditional loans, low doc car loans typically have faster processing times. The approval process is more streamlined with fewer documentation requirements. This enables ABN holders to access the funds they need more quickly.
4. Tax Deductions and Benefits: ABN holders may be eligible for tax deductions and benefits associated with low doc car loans. Depending on their business structure and circumstances, they may be able to claim deductions for interest payments and/or depreciation on the vehicle, potentially reducing their overall tax liability.

Cons

1. Larger Deposits: Some lenders may require a larger deposit to offset the risk associated with lower documentation.
2. Limited Loan Amounts: Lenders may restrict the amount you can borrow under a Low Doc ABN car loan.

Comparison with Traditional Car Loans

When comparing Low Doc ABN car loans with traditional car loans, several key differences emerge:

1. Documentation: Traditional car loans require extensive documentation, including proof of income through payslips or tax returns, which is not necessary for Low Doc loans.
2. Eligibility - Traditional car loans are for PAYG wage earners with stable employment and regular income. While Low Doc loans cater to self-employed individuals with less predictable cash flow and the vehicle must be used for business use.
3. Deposit - most lenders require some kind of deposit to secure a low doc ABN car loan. On the other hand, wage earners can secure a loan for the entire purchase price of the vehicle when there is proven affordability.

How to Apply for a Low Doc Car Loan?

Finding the best low doc car loan for your business is essential. And the best way is to leverage the expertise of an experienced finance broker who has access to a large range of lenders. There are many benefits to using a finance broker for your Low Doc ABN Car Loan.

The AAA Finance Team are both qualified and highly experienced. The team has access to a panel of over 40 lenders. We listen to your needs and tailor a finance solution to suit your individual circumstances. Our job is to match you with the lender who has the most competitive interest rate and best loan terms that suit your business. AAA Finance will save you time and money!