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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.
Here's how they work
Business car loan rates are extremely competitive right now, just below 3% in some instances plus you have the instant asset write off incentive.
Shopping around for the right business car loan can save you thousands of dollars in interest and fees.
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.
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.
|Chattel Mortgage||1-7 years||Business Tax Benefits||Vehicle is recorded on your balance sheet|
|Hire Purchase||1-7 years||Your business will own the car at the end of the term||May require an upfront deposit|
|Operating Lease||1-7 years||Lease is a tax-deductible business expense||Your business does not own the vehicle at the end of the term|
|Finance Lease||1-7 years||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|
|Arborists Builders Carpenters Caterers Cleaners Couriers Electricians||Fencers Glaziers Handymen HVAC technicians Labourers Landscapers Locksmiths||Mobile Mechanics Painters Plasterers Plumbers Pool Servicing Real Estate Agents Removalists Tilers|
If you are purchasing a second-hand vehicle, you may not be able to use it as security on the loan. Below are the most common types of vehicles purchased by businesses in Australia.
|Small vehicles||Large vehicles|
|Cars Motorcycles Work Vans Work Utes||Delivery Vans Trucks and Trailers Caravans Buses|
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.
|Asset||New or used||Loan term||Loan amount||Interest rates|
|Under 4.5 tonne||New||3 years||$30,000||4.79%|
|Over 4.5 tonne||New||3 years||$30,000||5.50%|
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||5.50%||$0|
|3-5 years old||6.50%||$500|
|5-8 years old||7.00%||$750|
|8+ years old||8.50%||$1,500|
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:
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.