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BUSINESS FINANCE
Compare unsecured business loans
By Sean Callery
Who’s eligible for a business car loan?
Generally, the minimum eligibility requirements for a small business loan in Australia include:
- Australian citizenship or permanent residency
- An active ABN or ACN
- Your business must be GST-registered (depending on the lender)
- At least six to 12 months of trading history
- A minimum annual business turnover of $75,000 - $100,000
- The ability to provide financials or bank statements
- A good credit score — the minimum business credit score is 475; for company directors, it's about 500 (it could be less if you're a homeowner).
- Operate in a non-excluded industry (some lenders won’t lend to the likes of gambling-related businesses, debt collection companies and tattoo studios).
The majority of business car loan borrowers (57%) have been in business for more than three years, Money.com.au data shows. These borrowers are also generally able to borrow more: $62,083 on average, versus $50,564 for businesses trading for 12 months or less.
How to apply for a business car loan
Compare business car loan options
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.
Prepare your application information
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.
Submit your financial documents
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).
Wait for your business car loan to be approved
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.
Financial documentation required for a business car loan application
| Minimum time in business | Financial documents required | Other requirements | |
|---|---|---|---|
Established business | More than 5 years | Two years of financials + 3 months of bank statements | Financials must be prepared by an accountant |
Business with low documentation | More than 2 years | Latest BAS statements + 3 months of bank statements | Must be a homeowner or have a 10% deposit |
New business/startup | Less than 2 years | 12 months of cash flow projections (prepared by an accountant) + 3 months of bank statements | Must be a homeowner or have a 10% deposit |
Sole trader | Up to 2 years | 2 payslips + 3 months of bank statements | Payslips must show ability to repay the loan |
Save time by finding the right business car loan option first time
Phil Collard, Asset finance expert
“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.”
Phil Collard, Asset finance expert
Should I get a business car loan with a balloon payment?
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.
Business car loan with & without balloon payment
| 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 |
Business car loan GST & tax benefits
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.
- For 2025-26, the car limit for depreciation is $69,674.
- The maximum amount of GST you can claim during that year is 1/11th of that cost limit — $6,334.
You can only claim a GST credit on the portion of the vehicle's cost related to business use. For example, if you use your vehicle for business purposes 51% of the time, you can only claim a credit of 51% of the GST you paid. Speak to your accountant about which tax benefits may apply to your business.
Maximum GST credit amount & car value limit
| Financial year | Maximum GST credit | Car value limit |
|---|---|---|
2025-26 | $6,334 | $69,674 |
2024-25 | $6,334 | $69,674 |
2023–24 | $6,191 | $68,108 |
2022–23 | $5,885 | $64,741 |
2021–22 | $5,521 | $60,733 |
2020–21 | $5,376 | $59,136 |
What fees do lenders charge on a business car loan?
Car loans for businesses also come with fees that can quickly turn a cheap-looking loan into a major expense for your business. These fees may be tax deductible, but nonetheless are worth minimising. Here are the most common business car loan fees to watch out for.
- Establishment fee: $150 - $550
- Documentation fee: $150 - $495
- Monthly account keeping fee: $0 - $10
- Extra repayment fee: Depends on loan amount & loan term
- Early payout fee: $0 - $450.
Other business car finance options
Chattel mortgage
A chattel mortgage is another term to describe a business car loan. It works like a secured car loan where you borrow a lump sum of money that you repay with interest over a fixed term. A chattel mortgage can also finance the purchase of business equipment, including machinery, mining equipment, kitchen equipment for restaurants, etc.
Finance lease
This is when the lender buys the vehicle on your behalf and leases it back to you in exchange for regular payments over a fixed period. You’ll have the option to buy the asset and assume full ownership of the car, trade it in, or opt for lease refinancing. A finance lease is generally used for long-term high-value assets like company vehicles and heavy machinery.
Operating lease
With an operating lease, the lender will buy the vehicle on your behalf and rent it to you in exchange for regular payments over a fixed period of time. You can upgrade the asset or equipment during the lease term, but never get ownership of it.
Personal car loan
You may be able to get a personal car loan for vehicles you use for business-related activities less than 50% of the time, like if you're a real estate sales representative or tradie. This option may be popular with self-employed individuals and sole traders.
Ready to compare business car loans?
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