Low Doc Loans and the Documentation Required
Getting your hands on a loan usually involves a lot of annoying paperwork. You need to bring proof of your payment with a paystub. You need to bring out the tax returns and the W2 forms. You have to pull out bank statements from all of your accounts. Basically, you have to bring in a lot of paperwork that will prove to the bank that you can qualify for a loan.
However, not all people can bring this kind of documentation – which is very troublesome if you actually need that loan. In these cases, low doc loans represent a very appealing option, since they take out the need for a full portfolio. So read on before Googling “Bad Credit History Loans”.
Why Would You Need a Low Doc Loan?
While it may have its ups and downs, there may be several reasons why you might need a low doc loan – other than needing loans for bad credit. Here are some examples:
- You’re self-employed and you don’t have enough paperwork to prove your income.
- You’re a young worker with a low-income history – or no history at all.
- You’re a new business owner that doesn’t have a history of consistent earnings. You will generally need a few years worth of history to be considered.
- You’re a retiree with an investment income.
- You have privacy needs that require you to keep your income to yourself.
- Gathering and organising your documentation is something you find difficult.
- You cannot prove your income and assets to your lender in any acceptable way.
In special circumstances like these, low doc loans can be total lifesavers. By taking the hassle out of gathering documentation, you can fix your financial problems without digging yourself into a bigger hole. Bear in mind that low doc loans come with a certain degree of disadvantages. Indeed, you will not have to bring as much documentation – but in exchange for these “trust proofs,” you will have to pay a bit more in interest. It’s important that you choose a lender that has lower interest rates.
What Documentation Will You Need?
Low doc loans are sometimes also referred to as no-doc loans. However, the truth is that you will still need some documentation – if only to prove that you’re not some kind of fugitive on the run, looking for some quick cash. These documents will prove to your lender that you are actually a trustworthy person and that you do have the means of paying off the loan. It may not be the standard paperwork – but it will definitely be something to work with.
Here are some documents that you’ll have to put together in order to get low doc loans:
The best way to prove to your borrower that your adventure as a self-employed person is going well is to show them a slip with your bank activity. Just put it together with your letter of application for low doc loans. You may not be able to bring in an official pay slip, but once they see how much money enters your account on a regular basis, they will be more than likely to offer you a loan.
Business Activity Statement
Each business activity statement is made specifically to fit a certain company, illustrating exactly the taxes and obligations that they are subjected to. This includes everything from the goods they handle, tax services, instalments, cash flow, and so on.
You should make sure that you bring as much information as possible if this is the case. Ideally, you should bring all the information that came over the past few months.
Signed Borrower Income Declaration
It happens; sometimes, you may just not be able to bring in proof of your income. This may be because of several reasons, like working without a contract or not having your entire pay noted on it.
As long as you have an official signed declaration that says exactly how much income you have (official or not), you will bring a certain level of assurance to your lender.
Letter from Your Accountant
An official letter from your accountant will also prove very useful in the event that you need to go for low doc loans. This letter is generally given if you are self-employed and you want to apply for a home loan. The letter should outline the condition of your business finances, and it will act in support of other documents you will need for your application (ID, home address, and so on).
Make sure that you conduct as much research as possible before you settle on certain low doc loans. If you don’t know where to start, you might want to give Bad Credit Loans a try. They have rates that are attractive even for those with low income.