In our other article on low documentation car loans, we detailed some of the ins and outs around this form of finance, including the common circumstances where this loan might be appropriate, and the benefits it can provide an applicant.
Among the key takeaways, we covered the fact that low documentation car loans are most suited for individuals that are unemployed or new to the workforce, recently arrived in Australia as a new migrant, or operate a complex business structure. What’s more, a low doc car loan can see you obtain finance quickly and in a confidential manner, while also setting you up to improve your credit score.
On that note, it’s time we also consider the requirements of low documentation car loans, since you will still need to jump through some hoops in order to obtain this form of finance.
What documents do I need?
Although a low doc car loan reduces the burden of documentation that you must provide, that does not mean that there are no obligations for you to put forth proof of your income. Regulations require that your financier conducts an income check in order to process your loan.
This means that in the absence of your most-tax return, you need to provide other evidence, be it historical tax returns, bank statements during periods of higher turnover, business activity statements, ABN and/or GST registration, or a letter from an accountant verifying your income. It is prudent to only submit the documentation you have been asked to provide, otherwise you may be queried further.
What sort of credit score do I require?
Much like every other loan application you’ll make in your lifetime, a higher credit score will always serve you better. In the eyes of a lender, your credit score is a reflection of your creditworthiness, so if your spending history demonstrates an ability to repay the loan, then you will stand in good stead. Generally speaking, you should only apply for a car loan if your credit score is at least 720.
Do I need to place a deposit or collateral?
If you are able to provide a deposit towards the car, you will improve your chances of receiving approval for the loan. Naturally, the bigger the deposit, the more favourable it is for your circumstances. Not just in terms of getting a tick from the lender, but also because you will reduce your repayments and lower the total interest costs over the course of the loan. If you can’t provide a deposit, the next-best thing you can do is put up some assets as collateral over the loan. This will reduce the lender’s risk, who may in turn reduce the interest rate of the loan.
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.