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Best Business Car Loans

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Business Car Loans

Written by

Shaun 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.

Here's how they work

  • Allows a business to finance a vehicle if it is used for business purposes 51% of the time.
  • Secured against the car being financed
  • Lower interest rates & fixed repayments
  • Highly popular with tradies and small businesses
  • Interest rates affected by the age and type of the vehicle
  • Available from a term of one year to seven years
  • Can offer significant tax benefits for a business

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.

What lenders are looking for

As a business owner, lenders will consider your living situation.

Living Situation - Commercial Finance

How lenders view credit history

Lenders will often review the personal credit scores of each Director as well as the company credit score.

credit history applicant

The type of car lenders prefer to finance

New business vehicles are preferred but you can still finance older cars or bigger vehicles too.

age of car being purchased

Key Features

  • Borrow from $5,000
  • Fixed rate, secured loans
  • Repayments to suit your budget
  • Terms from 1 to 7 years

Who is eligible?

  • Own a business and have an ABN
  • Business is GST-registered
  • Permanent Citizenship or Residency
  • Minimum business-operating time of six months
  • Can provide business bank statements

How to choose a Business Car Loan

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.

Compare types of Business Car Finance

TermProsCons

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

In some cases, you may be able to claim interest on business car finance. You can use our tax refund estimator to see how interest deductions may increase your refund.

Low Doc Car Loans with Money Matchmaker

Self-employed (sole trader) Business Car Loan

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.

Most common small businesses using vehicle finance in Australia

Small businesses A-ESmall businesses F-LSmall 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.

Common business vehicles purchased by Australian businesses

Small vehiclesLarge vehicles
  • Cars
  • Motorcycles
  • Work Vans
  • Work Utes
  • Delivery Vans
  • Trucks and Trailers
  • Caravans
  • Buses
Chattel vs Lease vs Hire Purchase with Money Matchmaker

Cheapest Business Car Loans

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.

Vehicle type vs Rates

AssetNew or usedLoan termLoan amountInterest rates

Under 4.5 tonne

New

3 years

$30,000

4.79%

Over 4.5 tonne

New

3 years

$30,000

5.50%

Important: This is an example and actual rates may differ.

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 vs Rates

Vehicle ageInterest rateFees

Brand-new

4.00%

$0

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

Important: This is an example and actual rates and fees may differ.

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.

  • Establishment Fee
  • Origination Fee
  • Monthly Account Keeping Fee
  • Early Termination Fee
  • Early Payout Fee

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.

Best Business Car Loan options

How to qualify and apply

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:

  • Have been in business 12 months; and
  • Have an ABN; and
  • Are registered for GST; and
  • Have a clean credit history
  • Are currently renting and can provide a 20% deposit; or
  • Own a home.

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:

  • Demonstrate an ability to service your business car loan or lease.
  • Meet the lender's criteria for acceptable credit rating
  • Meet the lender's criteria for minimum turnover and maximum debt
  • Provide profit and loss statements and your business balance sheet
  • Provide details of the asset you wish to purchase
  • Provide read-only access to your business bank statements

Here are the most popular business car loan questions people are asking:

How can I buy a car through my business?

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.

How long does it take to get approved for a business car loan?

You can be approved on the same day, however it's more likely you'll receive an approval within a few days.

What is the average interest rate for a business car loan?

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%.

Can I get a business car loan if I have bad credit?

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.

About the Author

Shaun McGowan from money.com.au

Shaun

McGowan

Shaun McGowan

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.

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