Are Low Doc Equipment Loans Worth It?
Are Low Doc Equipment Loans Worth It?
Are Low Doc Equipment Loans Worth It?
Low-doc equipment finance helps self-employed Aussies upgrade machinery and tools without full financials. Here’s the real cost and when it’s worth it.
Are Low Doc Equipment Loans Worth It?
For business owners and self-employed operators, upgrading or replacing equipment can’t always wait for the accountant to catch up. If your BAS or tax returns aren’t ready, a low doc equipment loan could help you get what you need faster — but at what cost?
Let’s unpack how it works, what the rates actually look like in 2025, and when paying a little more can make real business sense.
What Is a Low Doc Equipment Loan?
A low doc (or alt doc) equipment loan lets you finance machinery, vehicles or business tools without full financial statements. Instead, lenders may accept:
- Business bank statements (3–6 months)
- BAS statements
- An accountant’s letter verifying income
- ABN and GST registration
This structure helps sole traders, contractors, and small business owners access finance faster — particularly when traditional full-doc paperwork isn’t available yet. The asset itself usually serves as security, and the finance can be structured as a chattel mortgage, hire purchase or lease.
The Real Numbers: What You’ll Actually Pay
According to 2025 Australian market data:
- Full-doc equipment finance: typically 6.0 – 6.5% p.a. (Money.com.au)
- Low-doc (alt doc): typically 7 – 9% p.a. (Commercial-Loans.net.au)
- No doc / higher-risk: 8 – 12% p.a., depending on lender and asset type
That means the “loading” (extra rate) ranges between 0.5% – 3% higher than full-doc — not a flat 1%.
Cost Example: Real-World Scenarios
| Type | Typical Rate | Annual Interest | Difference |
|---|---|---|---|
| Full-Doc | 6.5% | $19,500 | — |
| Low-Doc (Good Profile) | 7.5% | $22,500 | +$3,000 |
| Low-Doc (Moderate Risk) | 8.5% | $25,500 | +$6,000 |
| No-Doc / High Risk | 9.5% | $28,500 | +$9,000 |
So the question isn’t “Is a low doc loan more expensive?” — it’s “Will this machine generate more than $3k–$9k extra revenue in a year?”
When a Low Doc Equipment Loan Makes Sense
- You’re self-employed or newly established. You’ve got trading history and cash flow, but your accountant hasn’t finished your financials yet.
- Time-sensitive opportunities. Waiting three months for paperwork could mean losing a big job, client, or tender.
- High ROI assets. If the new excavator, truck, or CNC machine can earn or save you thousands monthly, the rate difference becomes minimal.
- You prefer speed and simplicity. Fast approval and cash flow management matter more than chasing the lowest possible rate.
The Verdict
Low doc equipment loans are not a trap — they’re a tool. You pay slightly more for faster, easier access to capital. If the equipment will grow your business or save you time, that extra 1–3% could be one of your best investments this year.
At Switchboard Finance, we help business owners find the right balance — securing competitive equipment finance options that match your risk profile and cash flow.
Frequently Asked Questions
What documents do I need for a low doc equipment loan?
Most lenders will ask for your ABN, GST registration, business bank statements, and possibly a BAS or accountant’s letter. You usually don’t need full financials or tax returns.
Are low doc equipment loans more expensive?
Rates are typically 0.5%–3% higher than full-doc finance, depending on your risk profile and the type of equipment. Some lenders offer nearly the same rate if your trading history is strong.
Can I claim tax benefits with low doc equipment finance?
Yes. You may still be eligible for GST credits, interest deductions, and instant asset write-off — but always confirm with your accountant.
