All About Low Documentation Car Loans
So you have done the research, gone on test drives, and weighed your options as carefully as humanly possible. At long last, you have finally decided on a car to buy. It is within your budget, fits your needs like a glove, and looks great to boot!
So you go to the dealership, ready to drive home with your new car—only to find out that you do not qualify for any of the mainstream car finance options. Maybe you are self-employed and are lacking in the documentation department. Or you may even have a business, but it is still too small or too new to be taken seriously. Well, what you should know is these things happen more often than you might think, and it is, indeed, a very disheartening situation to be in. At this point, you only have two choices—you can either go home, dejected and discouraged, and give up on ever acquiring the car of your dreams, or, you can carry on and look for a solid alternative that will let you move forward with your purchase. The fact that you are reading this right now tells us that you already know the answer to your dilemma.
What is the answer?
Enter low documentation car loans. As the name suggests, this is a kind of car loan that requires little to zero documentation. This is particularly useful for self-employed applicants and small business owners who are unable to produce and present the multitude of financial paperwork that is demanded by most of the more common car loans and car financing options offered by mainstream sources like banks and other finance companies.
How do you know if it benefits you?
It is possible that your accountant is taking their sweet time in organizing your paperwork and finalizing your accounts. It is also possible that you are yet to complete your current income tax returns. It is even possible that you do not have enough bank statements to substantiate your income just yet as you are only starting out. And yet another possibility is that all your finances are tied up in investments, so you have difficulty proving your financial worth. You may not have pay slips and similar documents, either, because you are self-employed. If any of these applies to you, then a low documentation car loan may be the very solution you are looking for.
What’s the catch?
As we have already mentioned, with a low documentation car loan, you effectively do away with rigorous documentation demands so you need not jump over flaming hoops just to provide proof of income and proof that you can, in fact, pay for your loan. At most, you will simply be asked to complete an income declaration form, which can take the place of most accepted financial statements. Some financiers that offer low documentation car loan also make use of other means of verifying your income, as well. This is a very good way of avoiding the tedious and often unnecessary red tape associated with most mainstream loans.
Apart from the obvious benefit of not having to gather and submit financial documents, low documentation car loan also has other advantages. These include fixed or variable interest rates, simple repayment structures, and flexible terms that range from one to seven years. Residual value and balloon payments are also available as an option. On the downside, low documentation car loan tends to have higher fees and interest rates involved. This is because the financier will have to take a considerable amount of risk in order to provide the financing that you need. Furthermore, low documentation car loans are a lot less flexible and have fewer features compared to that of mainstream loan options.
But then, as they say, beggars can’t be choosers, and in the case of car loans, something really does need to give. For some, a little bit added to interest rates and/or rigid payment terms may seem like a small price to pay in order to acquire a car loan successfully. And when you’re driving away in the brand new vehicle of your dreams, you may even find that the extra demands are all worth it.
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