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In our ABN car loans guide:
An ABN car loan is secured vehicle finance designed for ABN holders. The finance is generally flexible to cater to different business types, with a low-doc application option for businesses with irregular income and cash flow.
Money.com.au data from 2022 and 2023 shows buying a vehicle is the most common reason businesses look for business finance – 38% of all loan requests.
The finance behind an ABN car loan is similar to a standard car loan or chattel mortgage. The difference is lenders and brokers who specialise in ABN car finance can help ABN holders with non-standard applications when some traditional banks won’t.
Here’s what’s you can get with an ABN car loan:
Eligibility for an ABN car loan will come down to the individual lender. But for most lenders we work with, these are the main requirements:
Do this before you apply with any one lender. Getting quotes from multiple lenders through a finance broker will allow you to compare your options without impacting your credit report. Consider the loan interest rate, fees, features and the lenders’ eligibility criteria.
Your application will likely be much smoother if you have the required documents ready. The main ones are personal ID (driver licence) and proof of business revenue (usually a business activity statement or contracts for confirmed upcoming work).
You can usually do this online through your chosen lender’s application portal. If you apply through a broker, they will submit the application on your behalf to save you time.
Some lenders offer conditional approval to borrowers up to a limit. This then gives ABN borrowers a confirmed budget for their vehicle purchase.
Once you’ve found a vehicle to buy and agreed the sale, you’ll need to give the lender information about the vehicle (via its registration) plus a tax invoice confirming the purchase price.
If the vehicle meets the lender's criteria, your loan will be funded (settled). This usually involves the lender making a direct transfer of funds to the seller.
“Some borrowers don’t realise that your car finance interest rate usually ends up being different to the one the lender advertises. You could be in for a shock when the quote comes back and it’s much higher than the initial rate you saw. By that stage you've made an application which goes on your credit record. Comparing multiple quotes first means you know exactly what the loan will cost before you apply.”
Mel Carter, Asset Finance Specialist at Money.com.au
Interest rates on ABN car loans typically start from around 7.5% p.a. The lowest rates tend to be available to well-established ABN holders with demonstrated business revenue over a sustained period.
When we’re negotiating the interest rate with lenders on behalf of ABN borrowers, these are the factors that usually have the biggest impact on the interest rate offered:
The maximum amount you can borrow with an ABN car loan will be determined by similar factors to those that impact your interest rate.
In other words, borrowers seen to be less risky will be able to borrow higher amounts.
But when assessing the loan amount, lenders place more emphasis on your business’s income, as this signals how much you can afford to repay. This is sometimes referred to as serviceability.
This is a question we’re commonly asked by ABN borrowers and the answer is yes you usually can on most kinds of business loans.
But you need to watch out for early payout fees. In some cases, the money you save on interest and regular loan fees by repaying the loan early could be cancelled out by a large penalty fee.
“If having the flexibility to repay the loan early is important to you, make sure you factor that in from the start when choosing a loan,” says Money.com.au asset finance expert Mel Carter.
“Otherwise you might find out down the line that there’s a big early payout fee that means paying off the loan early really isn’t worth it. This is not a nice surprise to get three or four years into your loan.”
But if you are able to secure an ABN car loan with no penalty for early repayment, the savings for your business by shaving time off the term can be significant.
|Full loan term||Paid off sooner|
Total to repay
Shopping around for the right loan can save you thousands of dollars in interest and fees.
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Hear from people who found the right loan
Yes it’s possible to get car finance as an ABN holder. There are some advantages to getting vehicle finance through your ABN instead of in your own name, including having access to specialist lenders and being able to claim loan costs as a tax deduction for your business.
To be able to get a car loan using your ABN, you’ll need to use the vehicle for business more than 50% of the time. You’ll also need to meet the lender’s eligibility criteria based on the vehicle you’re buying, your business trading history, revenue, expenses and other debt.
This depends on the lender but the most common ones we see requested are:
If you are relatively new to business or have irregular income, it may not be possible to provide the standard documentation. If that’s the case, the lender may be willing to accept work contracts as proof of future income, or a personal guarantee.
The short answer is yes, but only the interest paid and other finance costs, e.g. fees, according to the ATO. The actual loan repayments (paying back the amount borrowed) will not be tax deductible. You’ll also only be able to claim a tax deduction on the business use of the vehicle.
Yes you can. Most used vehicles can be financed through an ABN car loan, as long as they meet the lender’s age cut off. This is commonly 12 years (at the end of the finance term) but the cut off varies by lender and the type of vehicle. If the vehicle is not eligible for a secured ABN loan, you could consider an unsecured business loan.
It’s usually possible to have an ABN car loan approved and funded within a couple of business days. But ultimately this will depend on the lender, how complicated your application is and how quickly you are able to provide the documents requested by the lender. Remember too that for a secured car loan, most lenders will not give final approval until you have found and agreed a sale on the car you’re buying.
Yes, most lenders offer a balloon payment option on ABN car loans. This can be a popular choice for businesses who want to keep ongoing repayments low to help with business cash flow. It also means you have flexibility over what to do at the end of the finance term (pay off the vehicle to own it outright or refinance it for another term).
Usually lenders prefer to lend to businesses that have had their ABN and have been trading for at least 6-12 months. But if you have previous experience running a business in your industry, some lenders may lend to your current business even if it is relatively new. Showing you have ongoing revenue and future work locked in can also help with getting your loan approved as this reduces the level of risk your application poses in the lender’s eyes.
ABN car loans work in more or less the same way as standard car loans. The main difference is the eligibility criteria and the application process. For ABN car loans, these are designed to cater to ABN holders who have more complicated income and expenses than a typical PAYG employee applying for a car loan in their own name.
For this reason, ABN car loans are usually offered by more specialist lenders with experience dealing with business customers.