ABN Car Loans: Best Rates & Application Guide 2023
- Get your best rates on car finance for ABN holders
- Borrow up to $500k
- Get help with your application from lending experts
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How do ABN car loans work?
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:
- Borrow up to $500,000
- Loan terms from 1-7 years
- Finance a new or used vehicle
- Option to include a balloon payment
- Available for dealer or private sale purchases
- Flexible repayment options to match business cash flow
- No deposit required but can be an option to reduce your finance costs
- Early loan repayment possible (fees may apply depending on the lender)
Am I eligible for ABN car finance?
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:
- You must be an Australian citizen or permanent resident
- You must be an ABN holder
- Your business must be GST-registered
- Generally you must be trading for at least 6-12 months
- You must be able to demonstrate business revenue is sufficient to service the loan repayments
- You'll need to be using the vehicle for at least 50% business use
How to apply for an ABN car loan
1
Compare loan options
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.
2
Gather your application information
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).
3
Submit your loan application
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.
4
Get conditional approval (optional)
Some lenders offer conditional approval to borrowers up to a limit. This then gives ABN borrowers a confirmed budget for their vehicle purchase.
5
Provide vehicle details
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.
6
Your loan is funded
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.
Expert tip: Avoid rate shock
“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
What are the interest rates on ABN car loans?
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:
- How long your business has been operating: The longer the better in lenders’ eyes. If your business is relatively new but you have extensive experience in your industry, this can work in your favour. The average ABN car loan borrower has been trading for around 27 months, according to Money.com.au data.
- The type and age of vehicle: Lenders prefer newer vehicles for a secured ABN car loan. A vehicle with a higher potential resale value is less risky for them. For this reason, specialised vehicles with limited resale demand often have higher rates.
- Your revenue: If your business has a track record of generating strong and stable revenue, you will likely qualify for a lower interest rate.
- Your assets and liabilities: Lenders will factor in what assets you own (e.g. business equipment or personal vehicles, plus your overall debt level.
- Whether you’re a homeowner: Lenders see owning your own home (being an ‘asset-backed borrower’) as a sign of stability and reflect this with lower rates.
- Is it a dealer or private sale: This isn’t always a major factor but some lenders do prefer dealer sales as the purchase is usually backed by a statutory warranty.
How much can I borrow with an ABN car loan?
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.
Can I repay my ABN car loan early?
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.
Impact of paying your ABN car loan off early
| Full loan term | Paid off sooner | |
|---|---|---|
Loan amount | $75,000 | $75,000 |
Loan term | 5 years | 4 years |
Monthly repayment | $1,644 | $1,952 |
Total to repay | $98,612 | $93,705 |
Saving | $0 | $4,907 |
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Common questions about ABN car loans
Get help from a real-life Money Matchmaker® from start to finish.
Can I get a car loan with my ABN?
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.
What documents will I need for an ABN car loan?
This depends on the lender but the most common ones we see requested are:
- Driver licence
- Business activity statements
- Business bank statements
- Business plan
- Personal financial documents (bank and loan statements)
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.
Will my ABN car loan be tax deductible?
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.
Can I buy a used vehicle with an ABN car loan?
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.
How quickly will my ABN loan be approved?
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.
Can I get an ABN car loan with a balloon payment?
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).
What’s the minimum trading length requirement for ABN car loans?
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.
How is an ABN car loan different to a standard car loan?
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.
Written by
Loans Expert
Shaun McGowan
Reviewed by
Editor
Sean Callery
