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A growing trend in Australia is the low doc loan, which is issued to
you with very low, or no documents and involves a high rate of interest.
The only document required is your self-verified income and a valid ABN
for 2 years. These loans
were initially issued by financial institutions but the growing
competition has forced the banks to issue such loans on same terms and
conditions.
These loans are issued against security that needs to be kept with the
bank in order to receive the loan. The loan amount generally ranges from
60%-80% of the security kept. The non-payment will lead to the sale of
the security to realize the loan amount.
The competition among lenders has opened many options and suitable
conditions that would meet your requirements. There are several lenders
with different rates and offers. So, a considerable amount of shopping
before taking the loan or consulting a mortgage will be a good option to
get the best deal.
This kind of loans benefits people who do not fit in the conditions for
a standard loan. Such people may be self-employed people lacking the
desired papers, low-income group and people with bad credit. It meets
the requirement for fast cash and also has the option of getting
refinanced later when you desired to do so.
Apart from high interest rates these loans involves high fees and
additional securities safeguarding the risk of the banks in issuing
loans without verification of documents. There are different types of
low doc loans and you should be very careful while taking such a loan as
frauds does occur. But there are also a number of advantages of low doc
loans.
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