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A business car loan allows business owners and directors to borrow money (as a lump sum) to purchase a business vehicle. This means you'll use a car at least 50% of the time for business purposes, including company cars, utes, vans, and trucks.
It works similarly to standard car loans taken out by individuals but is designed specifically for business owners. You repay the loan in instalments with interest over a fixed term. Remember, the longer your loan term, the more interest you’ll pay.
The vehicle you buy is used to secure the loan, meaning the lender can repossess the asset if you default. A secured business car loan is a type of chattel mortgage.
Here’s quick snapshot of what you can get with a business car loan:
There are different eligibility and application requirements for business owners applying for a commercial car loan, which may require the expertise of brokers or specialised lenders.
Business car loan interest rates generally start from 7.50% p.a. Established businesses with a steady revenue stream and a good credit rating will generally qualify for the best rates.
Startups and businesses without a proven trading history may qualify for rates closer to 15% p.a. Consider enlisting the help of a finance broker to ‘shop the rates’ between bank and non-bank lenders.
Business car loan amount | $10,000 |
---|---|
Monthly repayments with 7.5% p.a. interest rate | $200.38 |
Monthly repayments with 9.5% p.a. interest rate | $210.02 |
Monthly repayments with 11.5% p.a. interest rate | $219.93 |
Business car loan amount | $20,000 |
Monthly repayments with 7.5% p.a. interest rate | $400.76 |
Monthly repayments with 9.5% p.a. interest rate | $420.04 |
Monthly repayments with 11.5% p.a. interest rate | $439.85 |
Business car loan amount | $30,000 |
Monthly repayments with 7.5% p.a. interest rate | $601.14 |
Monthly repayments with 9.5% p.a. interest rate | $630.06 |
Monthly repayments with 11.5% p.a. interest rate | $659.78 |
Business car loan amount | $40,000 |
Monthly repayments with 7.5% p.a. interest rate | $801.52 |
Monthly repayments with 9.5% p.a. interest rate | $840.07 |
Monthly repayments with 11.5% p.a. interest rate | $879.70 |
Business car loan amount | $50,000 |
Monthly repayments with 7.5% p.a. interest rate | $1,001.90 |
Monthly repayments with 9.5% p.a. interest rate | $1,050.09 |
Monthly repayments with 11.5% p.a. interest rate | $1,099.63 |
Business car loan amount | $60,000 |
Monthly repayments with 7.5% p.a. interest rate | $1,202.28 |
Monthly repayments with 9.5% p.a. interest rate | $1,260.11 |
Monthly repayments with 11.5% p.a. interest rate | $1,319.56 |
Business car loan amount | $70,000 |
Monthly repayments with 7.5% p.a. interest rate | $1,402.66 |
Monthly repayments with 9.5% p.a. interest rate | $1,470.13 |
Monthly repayments with 11.5% p.a. interest rate | $1,539.48 |
Business car loan amount | $80,000 |
Monthly repayments with 7.5% p.a. interest rate | $1,603.04 |
Monthly repayments with 9.5% p.a. interest rate | $1,680.15 |
Monthly repayments with 11.5% p.a. interest rate | $1,759.41 |
Business car loan amount | $90,000 |
Monthly repayments with 7.5% p.a. interest rate | $1,803.42 |
Monthly repayments with 9.5% p.a. interest rate | $1,890.17 |
Monthly repayments with 11.5% p.a. interest rate | $1,979.33 |
Business car loan amount | $100,000 |
Monthly repayments with 7.5% p.a. interest rate | $2,003.79 |
Monthly repayments with 9.5% p.a. interest rate | $2,100.19 |
Monthly repayments with 11.5% p.a. interest rate | $2,199.26 |
Business car loan amount | Monthly repayments with 7.5% p.a. interest rate | Monthly repayments with 9.5% p.a. interest rate | Monthly repayments with 11.5% p.a. interest rate |
---|---|---|---|
$10,000 | $200.38 | $210.02 | $219.93 |
$20,000 | $400.76 | $420.04 | $439.85 |
$30,000 | $601.14 | $630.06 | $659.78 |
$40,000 | $801.52 | $840.07 | $879.70 |
$50,000 | $1,001.90 | $1,050.09 | $1,099.63 |
$60,000 | $1,202.28 | $1,260.11 | $1,319.56 |
$70,000 | $1,402.66 | $1,470.13 | $1,539.48 |
$80,000 | $1,603.04 | $1,680.15 | $1,759.41 |
$90,000 | $1,803.42 | $1,890.17 | $1,979.33 |
$100,000 | $2,003.79 | $2,100.19 | $2,199.26 |
New and demo vehicles generally attract lower business car loan rates. That’s because newer vehicles usually have a higher resale value, which is less risky from a lender’s perspective. Used and specialised vehicles with limited resale demand (e.g. ice cream trucks) will attract the highest rates. Based on analysis by Money.com.au, most lenders have a cut-off of 12-15 years old for a secured small business car loan.
Here’s an example of base rates from our broker network for new and used car business loans.
Businesses with a proven trading history and a steady income (or healthy balance sheet) will generally qualify for a lower interest rate. Startups and businesses trading for less than two years may still qualify for a business car loan, but generally at a higher interest rate.
Lenders may review your personal credit score and that of your company directors when assessing your application for a business car loan. They will generally look for missed payments, defaults and insolvencies (e.g. bankruptcies).
Based on our analysis of various business lending criteria, lenders generally look for a minimum director credit score of 500-600 and a minimum company credit score of 475-500. Generally, a higher credit means a lower interest rate.
When determining your business car loan interest rate, lenders consider your business income and expenses, assets (such as business equipment or personal vehicles), and existing debts. As a general rule, the less debt/liabilities you have on your balance sheet, the more you can borrow.
Some lenders prefer that you buy a business vehicle via a licensed dealer, as the purchase is usually backed by a statutory warranty. When buying a vehicle from a private seller, you might not receive a statutory warranty, although the manufacturer's warranty could still be valid, and there’s usually no cooling-off period. Some lenders may apply a rate load of 0.50-1% to private sale purchases.
Lenders generally view borrowers who own their own home (or any residential property) as less risky than renters. That’s because homeowners are ‘asset-backed borrowers’ who can potentially borrow against their home equity to secure another loan or settle an outstanding debt. Homeowners can also generally borrow more than non-property owners and over longer terms.
The minimum eligibility requirements for business car loans include:
Consider getting multiple personalised quotes from lenders through a finance broker. This will allow you to compare business car loans interest rates, fees and features without impacting your credit report. Keep in mind that your individual rate usually ends up being different to the lender’s advertised rate.
Lenders will ask for financial documents to verify your business revenue and some information about your business’ structure, trading history and industry. Having this information ready will save you and the lender time. You can generally apply for a business car loan online through your lender’s application portal or via a broker who can submit your application on your behalf.
Your lender will ask to review business financials, since you’ll be making repayments using business income. You may be asked to submit business bank statements from the last six to 12 months, as well as business registration and tax information (e.g. BAS statements, tax returns). You'll have to confirm your identity by uploading some identification documents (e.g. driver’s licence or passport).
Your lender will evaluate your ability to repay the loan based on your business financials and will conduct a credit check. You may be granted conditional approval until you find a vehicle to buy and sign a purchase agreement, although this is optional. The lender will verify if your chosen vehicle meets the finance eligibility criteria and approve your business loan application if everything checks out.
Minimum time in business | |
---|---|
Established business | More than 5 years |
Business with low documentation | More than 2 years |
New business/startup | Less than 2 years |
Sole trader | Up to 2 years |
Financial documents required | |
Established business | Two years of financials + 3 months of bank statements |
Business with low documentation | Latest BAS statements + 3 months of bank statements |
New business/startup | 12 months of cash flow projections (prepared by an accountant) + 3 months of bank statements |
Sole trader | 2 payslips + 3 months of bank statements |
Other requirements | |
Established business | Financials must be prepared by an accountant |
Business with low documentation | Must be a homeowner or have a 10% deposit |
New business/startup | Must be a homeowner or have a 10% deposit |
Sole trader | Payslips must show ability to repay the loan |
Established business | Business with low documentation | New business/startup | Sole trader | |
---|---|---|---|---|
Minimum time in business | More than 5 years | More than 2 years | Less than 2 years | Up to 2 years |
Financial documents required | Two years of financials + 3 months of bank statements | Latest BAS statements + 3 months of bank statements | 12 months of cash flow projections (prepared by an accountant) + 3 months of bank statements | 2 payslips + 3 months of bank statements |
Other requirements | Financials must be prepared by an accountant | Must be a homeowner or have a 10% deposit | Must be a homeowner or have a 10% deposit | Payslips must show ability to repay the loan |
“Time is money for businesses, so it’s worth checking which type of business car loan you’ll qualify for before you spend time applying (and potentially needing to reapply). More often than not, business owners who don’t own a home and who’ve been operating for less than 12 months will have limited options, compared to business owners who own a home and profitable business.”
Shaun McGowan, Money.com.au founder and loans expert
Some business car loans may have the option to include a balloon payment. This is a lump-sum residual repayment you pay at the end of the loan term to clear your remaining loan balance. The balloon payment can range from 20-40% of your loan amount depending on what you agree with the lender.
Choosing a balloon payment option reduces your regular repayments, which can help free up cash flow for the business. But you’ll have a lump sum remaining at the end of the loan term. You’ll also pay more interest over the life of the loan if you include a balloon.
Car loan with balloon payment | Car loan without balloon payment | |
---|---|---|
Loan amount | $50,000 | $50,000 |
Loan term | 7 years | 7 years |
Interest rate | 8% | 8% |
Balloon payment | $10,000 (20% of loan amount) | $0 |
Monthly repayment | $690 | $779 |
Total interest payable | $17,970 | $15,462 |
Total to be repaid | $67,970 | $65,462 |
Cost difference | +2,508 |
The interest on your business car loan and other expenses related to owning and running a business vehicle, like depreciation, may be tax deductible as ‘business expenses’, according to the ATO. If your business is registered for GST, you may also be able to claim a credit for the GST included in the price of the vehicle (provided you have a tax invoice) in your Business Activity Statement (BAS).
The GST credit you can claim is capped at 1/11th of the car limit for depreciation set by the ATO each year.
Financial year | 2023–24 |
---|---|
Maximum GST credit | $6,191 |
Car value limit | $68,108 |
Financial year | 2022–23 |
Maximum GST credit | $5,885 |
Car value limit | $64,741 |
Financial year | 2021–22 |
Maximum GST credit | $5,521 |
Car value limit | $60,733 |
Financial year | 2020–21 |
Maximum GST credit | $5,376 |
Car value limit | $59,136 |
Financial year | 2019–20 |
Maximum GST credit | $5,234 |
Car value limit | $57,581 |
Financial year | Maximum GST credit | Car value limit |
---|---|---|
2023–24 | $6,191 | $68,108 |
2022–23 | $5,885 | $64,741 |
2021–22 | $5,521 | $60,733 |
2020–21 | $5,376 | $59,136 |
2019–20 | $5,234 | $57,581 |
Car loans for businesses also come with set fees that can quickly turn the cheapest loan into a major expense for your business.
Here are the most common business car loan fees to watch out for.
Here’s a list of some of the main business car loan providers in Australia:
While this is an extensive list, not all business car loan providers in the market may be included.
You can generally get a business car loan for any asset on wheels, up to 4.5-5 tonnes (depending on the lender). Here are some vehicles you can purchase with a business car loan.
Light vehicles
Heavy vehicles
Business machinery
Yes, you can apply for a small business vehicle loan if you’re self-employed or a sole trader with an ABN (registered for at least two years), and plan to use the vehicle for business at least 51% of the time.
Bear in mind that you must have adequate documentation to prove to the lender that you can repay the loan. Alternatively, you could consider a low doc business loan, which requires less documentation than a traditional business finance application.
You could be approved for a business car loan on the same day if your application is straightforward (i.e. you have all the required documents and meet the lender’s eligibility criteria). In some cases, approval could take 1-3 business days.
Business car loan interest rates can range from 7.5-15% p.a., depending on your business’ credit profile and the type of vehicle you’re buying. Business car finance rates are usually higher for heavy vehicles and secondhand cars.
Yes, you may still be eligible for a business car loan if you have bad credit. If you’re a discharged bankrupt or don't qualify for standard finance, you could apply for a bad credit car loan via a specialist lender. Business car finance rates are generally higher for borrowers with less than perfect credit.
No, your actual business loan repayments are not tax deductible. You can only claim tax deductions on the interest portion of your loan repayments and the vehicle’s depreciation, according to the ATO.
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