What documents will lenders ask for?

Paperwork is the part of a loan most people dread. It doesn’t have to be hard. Most of it is stuff you already have. The trick is sending the right things once, so nobody has to chase you.

Use this as a checklist. Then I’ll tell you exactly what your lender needs.

Why lenders ask

For personal loans and car loans, lenders and brokers must make reasonable inquiries about your situation, and take reasonable steps to check it. That’s part of Australia’s responsible lending law. It means a lender can’t just take your word for your income and expenses, and it can’t lend if the loan would be unsuitable for you.

Business loans are treated differently, because the responsible lending law covers personal borrowing. But lenders still want to see that your business can make the repayments, so expect questions and paperwork either way.

Everyone

• Photo ID. Your driver licence, and sometimes a passport or Medicare card.
• Your contact details and your address history.
• What you’re buying. The dealer’s invoice or quote, or the private seller’s details.
• Your debts. Credit cards (including the limits), personal loans, car loans, buy now pay later and any tax debts.
• Your living costs. A rough monthly budget. Your bank statements will usually back this up.

If you’re an employee

• Your two most recent payslips, as a starting point.
• Bank statements for the account your pay goes into.
• If you’re new in your job: your employment contract or a letter from your employer.
• Other income, such as rent from an investment property.

If you’re self-employed

Sole traders, partnerships, companies and trusts:

• Your ABN, and your GST registration if you have one.
• Business bank statements.
• Recent BAS statements.
• Your latest tax returns and notices of assessment, for you and for the business.
• Financial statements (profit and loss, and balance sheet), mainly for companies and trusts.
• Company or trust details, such as the ACN and the trust deed.
• Business debts, including other equipment loans and any ATO payment plans.

Not every lender asks for all of this. Smaller loans often need less. I’ll tell you which ones your lender wants.

If your latest tax returns aren’t done yet, speak to your accountant about when they’ll be ready, and let me know. There may be another way to show your income in the meantime.

For the thing you’re buying

• From a dealer or supplier: the tax invoice or quote. For equipment, it should show the make, model, serial number and price.
• From a private seller: the seller’s details, the registration papers and the vehicle details. Read buying from a private seller.
• Insurance. Many lenders want comprehensive insurance in place before they pay for a vehicle or machine.

Tips to make it quicker

• Send whole pages. Cropped screenshots often get sent back.
• Check the names. Bank statements should show your name and account details.
• Tell me about anything unusual early. A past credit problem, a tax debt or a recent job change. It doesn’t always stop a loan. But it changes which lender I’d choose.
• Check your credit report first. Equifax and Experian must each give you a free copy every three months.
• Black out your tax file number on tax returns and notices of assessment before you send them.
• Never edit a document. Send it exactly as it came. Lenders check, and giving false documents is against the law.

Gathering it all once means fewer phone calls and fewer delays. If something on this list doesn’t fit your situation, call me. There is usually another way to show the same thing.