29 September

What now for Low Docs Truck Loans as interest rates rise?

The recent increases in the cash rate by the RBA and the soaring inflation rate have caused concern for many business owners planning to purchase new vehicles with finance. The RBA Governor has indicated further rate rises will be in order in coming months so the situation does not look easing any time soon. This may raise particular concerns and uncertainties for those requiring specialist finance such as Low Docs Truck Loans.

Not all banks and lenders extend the option of Low Documentation (Low Docs) and No Documentation (No Docs) financing, which can present an initial hurdle for individuals seeking such loans. Furthermore, the elevated interest rates resulting from the rate increase by the Reserve Bank of Australia (RBA) may be perceived as an additional obstacle in the pursuit of securing affordable truck financing solutions.

Specialist truck finance is available from Jade Truck Loans including cost-effective Low Docs Truck Loans at workable interest rates despite recent rate rises. Our access to a wide choice of lenders enables us to continue to serve low doc and no doc customers with affordable truck loan rates. Rates and loan conditions which are especially negotiated for each individual customer.

We update on the situation for those in the market for low doc and no doc truck loans, what to expect and how to prepare in order to receive the most affordable loan offer.

Differentiating Low Doc and No Doc Truck Loans

For those not totally familiar with what is covered by this type of loan category, we’ll provide a brief overview of the conditions and features.

Firstly, it’s important to note that the terms no doc and low doc refer to the business or individual operator that is applying for the finance. It is not a completely different and separate loan product from the types of loans offered to fully-documented business finance applications.

The key difference, as the title infers, is in regard to the amount or quality of documentation that the business has to support the application. It may also relate to meeting the criteria as set for business finance applications to be approved by certain lenders.

Case in point, a quick browse of major bank for example and you’ll immediately note the criteria in regard to how long a business needs to have been operating in order to be eligible for some business finance. Many low doc and no do businesses are start-ups and as such, this application criteria would immediately make them ineligible for finance from that lender.

Another key point to note is that low doc and no doc loans are not automatically considered bad credit loans. That is a different area. Low doc applicants may have a very good credit profile. Working on fixing any errors on a personal credit report prior to application is strongly advised.

So essentially, low doc loan applicants will be operators looking to start up their own business and require a truck and truck finance in order to get underway.

Loan Options and Conditions

We have accreditation with non-bank lenders that offer low doc truck loans, so consider it a given that we are in a position to assist you. So let’s focus on what to expect in regard to truck loan options and conditions attached to this type of finance.

If approved for a low doc truck loan, the applicant may choose from the standard range of truck finance products which include:-

This is of course subject to any specific lender guidelines around the loan product which would be approved.

Additional conditions may be attached to low doc loans, such as:-

  • Property or other assets required as additional guarantee/security for the loan. This would be in addition to the vehicle being purchased.
  • An upper limit may be placed on the total amount of the loan that would be approved. This may be overcome by paying a larger deposit on the truck or by selecting a vehicle with a lower price.
  • Conditions may be attached in regard to the maximum term of the loan approved. Applicants can use our calculators to work up a number of options in regard to term and repayments so they are prepared for a number of loan offer eventualities.
  • Higher interest rates do not always apply. The rate offered will be based on an assessment of the overall application including in many instances an assessment of the personal credit profile of the applicant and their financial situation. In assessing low doc loan applications, the finances and credit of business and business owner may be closely entwined.
  • Workable interest rates can be achieved for low doc truck loans.
  • To improve prospects, prior to making application, business owners can look to improving their personal financial position by paying down debt.
  • The stronger the documentation that can be produced to support the application, may result in a better outcome.

Effect of Rising Rates

The impact of rate hikes by the Reserve Bank of Australia (RBA) has reverberated throughout the truck finance sector, mirroring the influence seen in other lending markets. Consequently, there has been a noticeable increase in interest rates applicable to all applicants, including those seeking low documentation (low doc) truck loans. For individuals opting for low doc loans, a crucial aspect to consider is that the escalated interest rates, compared to rates available just a few months ago, would inevitably result in a higher overall repayment amount for the loan.

When the interest element is amalgamated with the principal loan amount, the combined sum constitutes the total repayable amount of the loan. With interest rates continuing their upward trajectory and further increases anticipated, this can translate into augmented loan values. A greater total loan amount might potentially trigger lender stipulations, as previously mentioned. However, your Jade consultant will adeptly navigate these factors on your behalf, diligently working towards securing the most financially advantageous resolution.

To be prepared for such an outcome, applicants can consider the options as mentioned above – paying a larger deposit or selecting a cheaper truck. Note, used trucks can attract a higher interest rate than brand new vehicles for some applications. So having a used vehicle as a back-up option may not actually result in a better outcome. New vehicles attract better rates and can include many cost-efficient features which may deliver significant business benefits. Worth keeping in mind when making buying decisions.

The overall finance offer including the tax deductions available can be considered as a package when determining the benefit for the business.

So in general terms, the increases in interest rates should not have a significant effect on the prospects for low doc truck loan applicants. Not any more than for established business loan applications. Workable loan offers can be achieved through Jade Truck Loans.

Contact Jade Truck Loans on 1300 000 003 to discuss cost-effective low doc truck finance.

DISCLAIMER: THIS INFORMATION IS ISSUED PURELY FOR THE PURPOSE OF GENERAL INFORMATION PROVISION. IT IS NOT TO BE TAKEN AS THE ONLY SOURCE OF INFORMATION FOR BASING FINANCIAL DECISION-MAKING. THOSE REQUIRING FINANCIAL GUIDANCE AND ADVICE SHOULD CONSULT WITH THEIR FINANCIAL CONSULTANT OR ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY MISREPRESENTATION OF POLICIES, DATA OR ERRORS IN THIS CONTENT.

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