As the clock ticks down to the end of financial year, business owners typically look to take steps now to maximise tax deductions before 30 June. Purchasing new cars and other business vehicles may be on your agenda as you look to realise many of the additional tax measures available through the Federal Government COVID stimulus package. Specifically Instant Asset Write-Off and temporary full expensing.
But if you don’t have all the financial records and documents required by many banks and finance companies, you can apply through Jade Car Loans for a Low Docs or No Docs Car Loan. That’s all good, we’re accredited with many non-bank lenders which places us in a great position to achieve cheap loans for our low docs customers.
But there may be some lingering doubts around whether or not a low docs car loan is eligible to receive the same taxation benefits as a fully-documented loan?
Low docs car loans may be perceived by some as a type of loan which attracts a lot of restrictions and conditions. Conditions and restrictions may make the loan ineligible to take advantage of some of the current business tax measures available.
We’re providing this explainer to clarify what is involved with applying for and being approved for a low docs or no docs car loan and what tax benefits are available for the business with this type of finance.
Low Docs Car Loans
Low docs car loans are a special category of applicant rather than a particular and specific type of loan. The docs refer to the financial records that lenders request as part of the normal business finance application process. If you’re just setting up a business or have only been trading for a brief period, say less than a year you may not have accumulated those docs. There are other reasons for not having all these docs. Whatever the reasons, Jade has access to lenders that do offer loan for low docs applicants. Low docs car loans are available for the purchase of all types of motor vehicles used in the business – passenger cars, utes, cab chassis, vans, SUVs and others.
There are conditions that apply to low docs car loans compared with standard loans. While conditions applied to low docs car loans will vary depending on individual lenders, having a good credit profile is usually essential. Other conditions may include requesting additional security and as a start-up, this may involve a personal guarantee by the business owner.
With Jade Car Loans handling your loan sourcing process, you have the advantage of our consultants knowing which lenders are more flexible when it comes to approving low docs loans and which ones are currently offering the best deals.
Finance Product Selection
While there are additional conditions attached to the application process, these conditions are not restrictions when it comes to selecting the type of finance and hence how tax elements of the loan are treated.
Typically the business owner will select which type of loan/finance facility they are seeking prior to applying and in consultation with their accountant or finance advisor. That choice then forms part of the application. But an application for business vehicle finance can be submitted to Jade Car Loans based on the business information only and the finance facility selected after initial approval is granted. The interest rate differs across the loan range so to source a specific quote, the type of finance would need to be nominated. View our best business car loan interest rates and other car loan interest rates here.
Low docs applicants have their choice of our portfolio of car loan products:-
When approved and the finance contract settled, low docs car loans are subject to the same taxation treatment as fully documented loans. The way GST and income tax deductions are addressed is different for Chattel Mortgage and Leasing, the two most popular forms of car finance. We have detailed these on our dedicated web pages for your information.
Special Measures Available
Now to the specifics of the Government taxation measures currently in place for eligible businesses and eligible asset purchases and how these may impact low docs car loans. In basic terms, low docs and fully documented loans can both utilise these measures subject to eligibility and use of the appropriate finance facility.
Both IAWO and temporary full expensing are what is known as accelerated depreciation measures. They both allow the full purchase price of the asset, the vehicle, to be ‘written-off’ as a tax deductible expense in the financial year of purchase rather than as a percentage per annum.
Accelerated depreciation measures can be realised where the asset, being the car, appears on the business balance sheet. This applies to Chattel Mortgage but not to Leasing. With Leasing, the lender retains the ownership of the vehicle so the borrower is not in a position to depreciate the asset. But the leasing payments are a tax deductible expense.
With Chattel Mortgage, the borrower has ownership, the asset is entered on the balance sheet and an income tax deduction realised through depreciation according to ATO rulings. But the loan repayments are not tax deductible, only the interest portion.
Sourcing a Low Docs Car Loan
We can achieve our cheap interest rates on low docs loans. To expedite your business vehicle purchases with a low docs car loan, simply contact us and one of the consultants will handle the entire process for you.
For a quote contact 1300 000 003 today.
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.