Applying for a Low Doc Car Loan means you can secure financing with minimal paperwork. This makes it an ideal option for self-employed individuals and business owners. Unlike traditional loans that require extensive documentation, low doc vehicle finance documents typically include just a few key items to verify your financial position, streamlining the approval process.
The two main types of documents required are proof of income, such as bank statements or an accountant’s letter, and supporting documents, including identification. In this guide, we will break down exactly what documents you need to get approved for Low Doc Vehicle Finance.
Proof of Income
Low doc car loan lenders cater to borrowers with non-traditional income sources. Hence these lenders typically look for alternative ways to verify your ability to repay the loan. Unlike traditional loans, where you might need to provide detailed tax returns or payslips, low doc vehicle loans may require:
- Bank Statements: Bank statements show the inflow and outflow of funds in the borrower’s bank account(s). Lenders may request bank statements covering a specific period to verify the borrower’s income and assess their financial stability. Bank statements can provide insights into the borrower’s income sources, frequency of deposits, and overall financial behavior.
- Accountant’s Letter: Some lenders might accept a letter from your accountant verifying your income. This letter typically outlines the borrower’s income sources, business structure, and financial stability. It serves as a declaration of the borrower’s financial situation.
- BAS (Business Activity Statements): BAS documents provide a summary of a business’s transactions. Lenders may accept BAS documents as proof of income, as they reflect the business’s revenue and cash flow over a specified period.
While the specific income requirements vary by lender, demonstrating consistent and sufficient cash flow is key.
Supporting Documents
Even though low doc vehicle finance require less documentation, you’ll still need to provide certain documents to satisfy the lender’s requirements. These include:
- Identification: Lenders need to confirm who you are and where you live. Hence you will need to provide a copy of Government-issued ID. This identify is usually verified using your driver’s licence and Medicare card. Your driver’s licence must have up-to-date address details.
- Asset Verification: Being asset-backed—meaning you own property or have a mortgage—can work in your favor when applying for this type of loan. Lenders see mortgage holders as lower risk, which can help you secure a more competitive interest rate. To prove asset ownership, you may need to provide a rates notice or mortgage statement as part of your application. This asset verification reassures lenders of your financial stability, increasing your chances of approval and potentially reducing borrowing costs.
- Privacy Form. You will need to sign a privacy form when applying for a loan. This authorises the lender to collect, use, and disclose your personal information for the purpose of assessing your loan application and managing your loan account. Lenders will typically request a credit report to assess your creditworthiness.
- Vehicle Invoice. By reviewing the car invoice, the lender can confirm important details about the vehicle purchase, assess its value, and ensure that the loan amount aligns with the purchase price. This helps the lender make an informed decision about approving the loan and finalizing the financing arrangement. A Vehicle Identification Number (VIN) is a unique code assigned to each vehicle and is included on the invoice. This helps the lender verify the identity of the vehicle and conduct necessary checks, such as a vehicle history report.
Having these documents ready can streamline the loan application process.
Tips for Meeting Low Doc Vehicle Finance Requirements
Business owners and self-employed sole traders are often busy working in their own businesses and have little time to collate information and research and compare lenders. Meeting the requirements for a low doc car loan can be challenging. But with the right approach, you can improve your chances of approval.
- Maintain a Healthy Cash Flow: Regular deposits into your bank account can demonstrate income stability, which is crucial for lenders.
- Improve Your Credit Score: Paying off outstanding debts and avoiding new credit inquiries can help boost your credit score before applying.
- Consult a Finance Broker: A broker can help you navigate the low doc vehicle loan market. They can also assist with any documentation requirements. AAA Finance has a team of experienced finance experts that will save you both time and money. From our large range of lenders, we will find a lender that best suits your financial situation at the most competitive interest rate. Find out more about the benefits of using a business car finance broker.
