Wondering if you meet the low doc car loan eligibility requirements? Low Doc Car Loans are designed for self-employed individuals and businesses with an ABN. These loans offer flexible financing without the need for extensive paperwork. Find out more about the many benefits of Low Doc Car Loans in our comprehensive blog.
Lenders have specific eligibility requirements, including proof of income, GST registration, and credit history checks. In this guide, we’ll break down exactly who qualifies for a low doc car loan and how you can improve your chances of approval.
Low Doc Car Loan Eligibility
1. ABN
Your business must have a current operational Australian Business Number (ABN). In fact, most lenders require your ABN to be over 6 months old to be eligible for low doc car finance. Furthermore, the duration of your ABN and its GST status are key factors in determining which lenders we can approach on your behalf for a low doc car loan. If you have GST registration it signals to lenders that your business has an annual turnover exceeding $75,000, which can enhance your credibility. Additionally, a longer operational history offers lenders reassurance that your business is operating successfully, rather than a new startup.
2. Business Use
The vehicle being purchased must be used for business purposes. Business use refers to utilising a vehicle primarily for activities that are directly related to the operation of a business. This means that the vehicle is employed in tasks that contribute to generating income or facilitating the business’s day-to-day operations. Below are some examples of business use.
- Delivery Vehicles: A bakery might use a van to deliver goods to customers, ensuring timely distribution of products. The van is essential for fulfilling customer orders, making it a business use.
- Service Vehicles: A plumbing company might purchase a truck to transport tools and equipment to job sites. The vehicle is necessary for the plumbers to perform their services, categorizing it as business use.
- Client Transport: A real estate agency may buy a car to drive clients to property viewings. The vehicle helps in providing a professional service, thereby supporting the business.
- Sales Vehicles: A sales representative for a wholesale company might need a vehicle to visit clients and showcase products. The car is used in direct business activities, making it a business asset.
- Mobile Business: A food truck is a classic example of a vehicle for business use, as it serves as the primary location for the business operations, directly generating revenue.
In all these examples, the vehicle plays a crucial role in enabling the business to function and meet the low doc car loan eligibility criteria.
3. Documentation
When applying for a low doc car loan, documentation is generally divided into two categories. Firstly basic documents and secondly proof of income.
Basic documentation is required to process your loan application. This includes a driver’s license for identity verification, a signed privacy form granting permission to check your credit file, a vehicle invoice detailing the car’s purchase price and details, and a property rates notice if you own property, which can help secure a better interest rate.
Even though low doc loans require less documentation than traditional loans, you will still need to provide some proof of income. This could include recent bank statements, an accountant’s letter confirming your income or a Business Activity Statements (BAS). These documents help lenders assess your ability to repay the loan and determine the loan amount and interest rate.
There is also an option to get a car loan with no proof of income using a No Doc Car Loan option.
4. Good Credit History
Lenders will typically assess your credit history and credit score to determine your creditworthiness. Some low doc lenders are more flexible with credit history requirements compared to traditional lenders. However, having a good credit score can improve your chances of approval and may help you secure more favorable loan terms.
5. Deposit / Loan-to-Value Ratio (LVR)
Lenders may consider the loan-to-value ratio. That is, the ratio of the loan amount to the value of the car. In effect, if you have a lower LVR, you are borrowing a smaller percentage of the car’s value. Hence, a lower LVR can improve your chances of an approval and may lead to better loan terms. Generally the easiest way to lower a LVR is by paying a deposit. While not all lenders require a deposit some may insist on a 10 to 20% depending on your specific circumstances.
Low Doc Car Loan Eligibility: Apply Now!
It’s important to note that the eligibility criteria vary between lenders. In addition, the eligibility criteria are constantly updated and can change on a weekly basis. Obviously, this is where an accomplished and professional finance brokerage can help!
AAA Finance has a team of highly experienced finance brokers to navigate the sea of lenders on your behalf. Our job is to find the lender that suits your circumstances at the most competitive rate on the market. In order to provide the best option for your circumstances, we shop around and compare loan offers from different financial institutions. At AAA Finance, we will save you both time and money. Call 07 5493 1222 to experience the AAA difference today!
