Low doc car loans for ABN holders
Self-employed workers often don't have the documentation of company employees.
For example, they may not have payslips or documentation regarding the businesses' taxable income.
This is where low doc car loans come in.
They are a type of ABN car finance, which allows ABN holders to get a car loan without the usual amount of documentation required.
In some instances, no doc car loans or car loans which do not require any documentation may be available. However, these instances are quite rare, low doc loans are a more common option.
Additional ABN car finance information for sole traders
Self-employed workers with an ABN also often use business car loans to finance vehicles, as loans of this type feature a range of cost and tax related benefits. They may also offer a lower interest rate.
Business car loans for ABN holders include:
- Commercial hire purchase
- Chattel mortgage
- Finance lease
Workers with little business documentation may also use low doc car loans. Loans of this nature are best suited for self-employed persons who are yet to file a business tax return.
1. Commercial hire purchase
A commercial hire purchase is a fixed rate car loan, where a lender purchases a vehicle on your behalf, and then 'leases' it back to you in exchange for regular payments.
During this leasing period (loan term) you have full control of the vehicle. You can use it however your business requires, although the lender is in fact the owner.
When you have paid back the full value of the vehicle and any interest incurred, the vehicle's title is then transferred to you from the lender, making you the legal owner.
Benefits of this type of ABN car finance include:
- Fixed interest rates. So you always know what you pay.
- Flexible loan features. Can be customised to suit you.
- Tax deductions are often available.*
*Consult a tax professional for specific advice regarding tax implications.
2. Chattel mortgage
Other types of fixed rate car loans for ABN holders include the chattel mortgage.
Under a chattel mortgage, your lender provides you with money for the purpose of buying a car. You then buy your car and repay the borrowed amount, plus interest.
During the repayment period (loan term) the lender has a security charge over your vehicle in the form of a 'mortgage'. However, this concludes at the end of the repayment period.
Unlike other sorts of ABN car finance such as commercial hire purchases, you are recognised as the owner of your car from the start. And this gives you flexibility over how/how-frequently you make repayments.
Benefits of chattel mortgages include:
- Flexible loan terms. Typically 2 - 5 years.
- Balloon payments available. Lowers your monthly repayments.
- Input Tax Credits may be available if you are registered for GST*
*As stated above, always consult a tax professional for specific advice about tax implications.
3. Finance lease
A finance lease is another type of ABN car finance commonly used by self-employed Australians.
Similar to a commercial hire purchase, under a finance lease, a lender purchases a chosen vehicle on your behalf. You then 'lease' the vehicle from the lender until its value is repaid, plus interest.
If you're searching for car loans for ABN holders and need flexibility regarding your balloon payment, then a finance lease may be for you. This is because finance leases feature flexible balloon payment options.
For example, at the end of the lease period, you have three choices.
You can pay your balloon payments and take ownership of the vehicle. You can sell the vehicle to cover the payment. Or you can refinance in order to pay the payment in monthly instalments.
The benefits of a finance lease include:
- Flexible contract terms. Including for your balloon payment.
- Ability to make advance payments. Ideal for businesses with irregular cashflow.
- Tax deductions can often be claimed for lease payments.*
*See a tax professional for advice regarding tax implications.
Need a car for your business? Let us find you finance.
At Rapid Finance, we've been finding car loans for ABN holders for over 15 years, and we could help you too. Our car loan specialists make securing ABN car finance fast and easy.
Whether you prefer a commercial hire purchase, chattel mortgage, finance lease, or low doc loan, we could match you with a suitable finance solution.