‘Low-doc loan’ is short for ‘low-document loan’. It refers to a type of loan approval process that is based on a fewer number of documents than might regularly be required.
For example, a person who is self-employed may not have pay slips issued regularly, if at all. Equally, they may not have records of tax returns to confirm their level of income.
Low-doc loans are geared towards the self-employed or full time investors, who are less likely to have a regular income. As such, their interest rates are likely to be higher than average.
How do I get a low-doc loan?
An applicant applying for a low-doc loan will usually need to satisfy their lender that they have some security of income, supply records to confirm their self- employment (for example, supply ABN or business records, etc.) and complete a declaration, possibly supported by their accountant, that they are capable of making repayments on the loan.
The level of self-certificate required for a low-doc applicant will depend on the size of the loan applied for. In the case of vehicles, a lower level of certification is likely to be required, compared to say a home loan for example.