Low Doc Car Loans

You can apply for low doc car loans if you’re self-employed, short of documents or don’t have up-to-date financials.

No obligation. It won't affect your credit score.
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, updated on April 4th, 2024       

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If you’re a business owner requiring a car predominantly for commercial purposes but lack the necessary two years of tax returns, a low doc car loan could be the ideal solution. In fact, low doc loans present some hugely attractive ongoing tax and GST benefits.

Savvy works with a wide range of lending partners, some of whom offer low doc lending solutions. Our expert consultants can help you find the most cost-effective low doc loan deal available from our panel, even with non-standard documents. Get a quote now to get your application started today.

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Why choose Savvy?

Low doc car loan features and benefits

Borrow up to 100% of your car’s value

There aren’t any mandatory deposits on low doc car loans, so you can borrow the full purchase price of your car (plus on-road extras like stamp duty and car rego).

Repay over up to seven years

You have a say in the cost of each of your car loan repayments and can ensure that they’re manageable for you by choosing between one and seven years in length.

Set your own repayment schedule

In addition to this, you’re able to structure the frequency of your car loan repayments around your personal income flow on a weekly, fortnightly or monthly basis.

Pay no GST on your car purchase

Because you’re buying your car for business use, you can claim for GST on the purchase price, which is likely to save you thousands of dollars in the process.

Tax-deductible interest

In addition to this, you’ll pay interest on each of your instalments. However, because this too is a business expense, you can claim these on your tax returns.

Claim for vehicle depreciation

Finally, the decline in value of your car is also able to be claimed on tax as a business expense, saving you further money particularly if you’re buying a new car.

Low doc car loans explained

What is a low doc car loan?

A low doc, or self-declaration, car loan is functionally the same as a standard full doc commercial product. However, it’s designed for applicants who can’t supply their last two years’ worth of completed tax returns, such as self-employed individuals and sole traders.

Because of the increased risk associated with lending to someone without a conventional pay structure and fewer documents to supply, this results in loans with further restrictions around borrowing power and loan term, as well as a higher interest rate.

Low doc loans are commercial agreements, meaning you’ll need to use the vehicle at least 51% for business purposes to qualify for the loan. This means they fall under the chattel mortgage structure, which is a popular and cost-effective method used by anyone from sole traders to large companies to purchase vehicles.

The ‘chattel’ in this instance is the car you’re buying, and the term ‘mortgage’ is the interest your lender has in your vehicle until you pay off the loan.

How to qualify for a low doc car loan

The specific requirements for a low doc loan will come down to the lender you choose to borrow from. However, to qualify for a car loan, you’ll generally need to tick off the following criteria:

  • You must be an Australian citizen, permanent resident or an acceptable visa-holder
  • Your ABN or ACN has been active for at least one year
  • You’re registered for GST
  • You’re asset-backed, namely by a house or commercial property
  • If you aren’t asset-backed, you should have a large cash deposit which you can contribute to the purchase
  • You must use the vehicle for business purposes at least 51% of the time

The documents you’ll need for a low doc car loan

It’s important to know the variety of documents you’ll need to submit as part of the low doc car loan process. While these may also differ between lenders, you’ll be asked to produce at least some of the following:

  • Signed declaration of your business income
  • Letter from your accountant, confirming the projected income
  • Three to six months’ worth of trading bank statements
  • BAS returns for the last two quarters
  • Proof of ABN or ACN registration
  • Details about your business, its activities and how revenue is earned
  • Information about your current assets, liabilities and other ongoing expenses

Additionally, you’ll need to complete application and privacy consent forms, as well as provide proof of ID like your driver’s licence and/or passport.

It's important to note, though, that even if you don't meet all the above criteria or documentation requirements, these can be assessed on a case-by-case basis and approvals are still possible in some situations. You can speak with a Savvy consultant about your situation if you're unsure and want to know more about your options.

The cost of low doc car loans

As mentioned above, the increased risk associated with low doc loans will likely lead to a higher interest rate on your loan than you’d receive on a standard car finance deal. The table below demonstrates how different loan sizes and interest rates can impact the cost of your loan.

Loan amount 7.00% p.a. interest 8.50% p.a. interest 10.00% p.a. interest
$20,000
$396
$410
$425
$35,000
$693
$718
$744
$50,000
$990
$1,026
$1,062
$65,000
$1,287
$1,334
$1,381
$80,000
$1,594
$1,641
$1,700

All figures above are calculated based on a five-year term with monthly repayments.

The cost of low doc car loans with balloon payments

Some lenders will also give you the option to add a balloon or residual payment to the end of your loan. These essentially act as a reverse deposit, with a lump sum payment to be made at the conclusion of your loan instalments.

While they reduce your monthly payments, they increase the overall cost of your loan. The below table illustrates this for a $30,000 car loan repaid over five years at 7.00% p.a. interest:

Balloon size Cost of balloon Monthly payments Overall cost
No balloon
$0
$594
$35,642
5% balloon
$1,500
$573
$35,885
10% balloon
$3,000
$552
$36,128
15% balloon
$4,500
$531
$36,371
20% balloon
$6,000
$510
$36,614

As you can see, while adding a 20% balloon payment decreases your repayments by almost $85 per month, it also adds just under $1,000 to your loan’s cost compared to one with no balloon. This is because, in this instance, your loan balance is gradually reducing to $6,000, rather than $0. As a result, your balance decreases more slowly, meaning you paying more interest.

How to compare low doc car loan options

There are several features you should look to compare when choosing your low doc car loan, including the following:

  • Maximum and minimum loan amount
  • Maximum and minimum loan term
  • Interest and comparison rates
  • Fees
  • Repayment and deposit flexibility

Fortunately, when you apply with Savvy, we do all the heavy lifting for you. We’ll compare all the available options among our panel of trusted Australian lenders to determine which is the cheapest and most suitable loan available for your needs.

The difference between low doc and no doc loans

No doc loans are no longer available in today’s market. They’ve essentially morphed into what most lenders now offer in their low doc loan range. Low doc loans have undergone radical change over the years also, with tighter lending policies and a shifted focus towards responsible lending.

Although low doc loans are a commercial product and fall outside of consumer responsible lending guidelines, lenders have begun to apply further scrutiny, which is usually only required in consumer lending, into their commercial assessments as well.

Your most frequently asked low doc car loans questions

Can I take out a low doc loan for a private-use car?

No – low doc loans are, by nature, commercial products that are available to businesses and self-employed workers exclusively. If you don’t have the last two years of tax returns, you aren’t eligible to apply for any type of private-use secured car loan.

Can I take out a low doc car lease?

Yes – both car leases and hire purchases can be taken out under low doc conditions. These products are considerably less common than chattel mortgages, but there are still financiers who offer them among their product range. You can speak to your Savvy consultant about low doc options for other finance products if you’re looking at another arrangement besides chattel mortgages.

How do I work out what I can borrow?

Your borrowing power is based on a variety of factors, including your credit score, your income (both current and projected), your savings and your history servicing similar debts. Your Savvy consultant will run an affordability check based on these factors in your application to determine the maximum figure you can feasibly be approved for, which is useful in saving time spent applying for more than you can manage.

Am I able to buy a used car with a low doc loan?

Yes – we partner with lenders who can accept secured loans for cars up to 20 years of age (and sometimes older) at the point of purchase. You can also purchase these either from a dealer or from a private seller located across the country, no matter where you live. Your consultant can help you arrange an interstate used car purchase should you wish to pursue one.

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