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The rates are based on who you are and where your business is at
Written byShaun McGowan
It's always an exciting time as a business to be buying a car.
With business car loans, you get to claim the GST back on the car and can also claim the depreciation back on your BAS.
As a business owner, lenders will consider your living situation.
Lenders will often review the personal credit scores of each Director as well as the company credit score.
New business vehicles are preferred but you can still finance older cars or bigger vehicles too.
Shopping around for the right loan can save you thousands of dollars in interest and fees.
There are several types of business car finance in Australia, each with its own terms and pros and cons. Some types of finance are more suitable for a single vehicle, while others are tailored to accommodate businesses requiring an entire fleet of company cars.
You can use the table below to quickly compare popular business car loans and learn more about each type of finance on their dedicated pages.
You can read our guide to compare the benefits of a chattel mortgage vs lease vs hire purchase.
Business Tax Benefits
Vehicle is recorded on your balance sheet
Your business will own the car at the end of the term
May require an upfront deposit
Lease is a tax-deductible business expense
Your business does not own the vehicle at the end of the term
Option to own vehicle at the end of the term
Responsible at the end of term for disposal
Small Business Loan
up to 5 years
Fast access to money
Can be expensive
You can apply for business car finance if you intend to use the vehicle for business purposes at least 51% of the time. In Australia, company car finance is used by businesses of all types, and across all industries, to finance everything from a single vehicle to an entire fleet of company vehicles.
|Small businesses A-E||Small businesses F-L||Small businesses M-Z|
Types of places you can buy your car from; You can buy a new car or if the wait is too long in the current environment, you can purchased a used car through a dealership or privately.
|Small vehicles||Large vehicles|
With a business car loan, you can purchase almost any type of vehicle for your business. The type of vehicle you purchase, as well as its age, will dictate the amount of interest you pay on your loan. For example, brand-new vehicles will attract the lowest interest rates, while vehicles over eight years old will attract the highest.
Large vehicles will often attract higher interest rates than small vehicles. You can see below how the weight of your chosen company vehicle may affect the interest rate applied to your loan or lease. This is especially important for small businesses or tradies looking to purchase delivery trucks or transport vehicles of a certain size.
|Finance amount||5% interest||7.5% interest||10% interest|
|Asset||New or used||Loan term||Loan amount||Interest rates|
Under 4.5 tonne
Over 4.5 tonne
Now let’s look at how the age of your vehicle may affect your interest rate. You can see that brand-new vehicles have the lowest interest rates and fees, as these vehicles present the lowest amount of risk to a lender — these cars have a lower chance of mechanical failure and a higher resale value.
|Vehicle age||Interest rate||Fees|
1-2 years old
3-5 years old
5-8 years old
8+ years old
Just as the age of a vehicle will affect the interest rate applied to your loan, the older the car you wish to finance, the higher the fees will often be. You may also pay various establishment or ongoing repayment fees depending on the lender you wish to apply with.
Important: These are examples of the types of fees that may be applicable.
Finance brokers can handle the entire loan application process on your behalf in return for a small fee. A finance broker can help you find business vehicle finance options with no monthly repayment fees, though this may limit your available options.
Business vehicle brokers operate in Sydney, Canberra, Melbourne, Perth, Brisbane, Adelaide, Newcastle, and all local areas across Australia.
Applying for business car finance is usually quick and easy, and in most cases can be done online. With any type of business finance application, you’ll need to present a lender with sufficient documentation that illustrates your ability to comfortably repay the loan amount.
Most times, just your business bank statements will be sufficient to illustrate your monthly business revenue.
There are two types of applications for business car finance in Australia: streamlined applications and standard finance applications.
If you’re applying for vehicle finance to the value of $150,000, you can qualify for the streamlined application if you:
If you’re looking for funding greater than $150,000, or have been in business less than 12 months, you’ll need to apply through the standard finance application process.
If this is the case, you’ll need to provide additional documentation to the lender so they can better assess your application. Here are some tips to improve your chances of getting approved:
Loan Amount: --
Establishment Fee: --
Total Interest Paid: --
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|YEAR||REMAINING BALANCE||MONTHLY REPAYMENT||INTEREST PAID||ENDING BALANCE|
If you're planning to use the vehicle for more than business purposes at least 51% of the time, the most common type of finance is called a Chattel Mortgage. You can apply for a chattel mortgage online and often be approved within the same day.
You can be approved on the same day, however it's more likely you'll receive an approval within a few days.
The interest rate will depend on the age of the vehicle you want to buy, but can be as low as 5.00% and as high as 16.00%.
Yes, you can get a business car loan in Australia even if you have a bad credit score. If you are an ex-bankrupt or don't qualify for a standard loan due to defaults or a low credit score, you can apply for a bad credit business loan or a bad credit car loan.
Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.