The Finder app is here! 🥳🥳 Download the new Finder app!
Get your savings sorted.Take control of your money with the all-new Finder app. Now available for free for iOS and Android. It's your new way to save, sorted.
If you're a sole trader or business owner looking for a business car, you have a range of vehicle finance options. Unlike personal vehicle loans, a business car loan will often come with tax benefits and flexible lease options.
Find out what type of business vehicle finance is right for you and compare business car loans below.
Finance lease. This option allows your business to enjoy the use of a commercial vehicle and all the benefits of ownership while the lender retains vehicle ownership. The lender purchases the vehicle on your behalf and then leases it back to you. You make monthly lease payments until the term of the lease is up, at which time you can pay off the remaining value on the lease and take full ownership of the car, trade the car in or look to refinance the lease.
Commercial hire purchase. This business car loan lets you hire a car from a lender for an agreed period. You then make fixed monthly repayments over this period and take ownership of the vehicle at the end of the loan term, provided you have paid off the loan.
Chattel mortgage. A chattel mortgage involves a lender lending you the money you need to purchase a vehicle. You take immediate ownership of the vehicle but the lender takes out a mortgage on the vehicle as loan security. Once the contract is over, the lender will remove the mortgage.
Novated lease. This is a vehicle finance option that allows employees to lease a vehicle using their pre-tax income. The employer arranges for the lease payments to be taken directly from the employee's salary, meaning they can reduce their taxable income. The employee will generally need to stay employed throughout the lease period and have an employer that supports novated leasing.
Business loan. You can also use standard business finance to fund the purchase of a vehicle. You have a range of options available with business finance, including a term loan and a line of credit.
Car loan. Many regular car loans may also be available to businesses, although without the tax benefits of other business vehicle finance options.
How do I decide which business car finance is right for me?
There are a number of financing options available to help you purchase a business vehicle and it can be tricky to work out which one is best. To help narrow down your choices, consider the following:
Do you want to retain ownership of the vehicle? Some financing options give you ownership of the vehicle once you start repaying the loan, but others only grant ownership at the end of the loan term. Some, such as finance leases, are not intended to grant ownership at all. Consider whether you want to be able to claim the vehicle as a business asset when considering your business car loan options.
What is the purpose of the vehicle? If you will be driving the vehicle a lot, then you may want to consider a car loan that gives you a new vehicle at the end of the term (finance lease) to avoid overuse. This is also the case if you're planning to replace the vehicle within that time frame.
What is your business situation? Whether you are part of a company or a sole trader will affect the choices you have available. For example, a novated lease is only available to employees, which means sole traders are unable to apply.
Tips to get the most out of your business vehicle finance
Chat with an accountant before you apply. There are a number of car financing options available to businesses and an accountant can help you decide which one may work best. Accountants can also tell you which part of the finance – the interest and the rental payments – are tax-deductible to help inform your decision.
Negotiate your repayments structure. Lenders can offer monthly, quarterly, half-yearly or annual repayment terms or even repayments structured around your cash flow. See how flexible the lender is before you apply and negotiate terms based on your business needs.
What are the benefits and drawbacks to consider?
Possible tax benefits. Your business may receive tax benefits, depending on how much you spend and the business car loan option you select.
Flexible repayments. Choosing the right finance option enables you to select a repayment schedule that suits your needs and budget.
Tax issues. Navigating tax issues can make choosing the right loan complicated and may require the help of a tax agent.
Vehicle ownership. Not all options allow you to retain ownership of the vehicle, meaning your business could be paying for an asset that it does not own.
Things to keep in mind when comparing business vehicle loans
What are the features of the loan? This includes the interest rate, length of the loan term and any fees and charges you will need to pay.
How do I repay the loan? You will need to make regular repayments with any form of vehicle finance, and you will need to factor these into your business's cash flow plan. Look for a vehicle finance option that allows you to tailor repayments to suit your cash flow. Some finance options, such as commercial hire purchase, may require you to make a lump-sum balloon payment at the end of your loan term, which you will also need to factor into your budget.
What are the tax implications of the loan? Claiming the expense of buying a vehicle for your business as a tax deduction varies greatly depending on which vehicle finance option you choose. For example, a chattel mortgage will allow you to claim interest charges and the depreciation on the vehicle as a tax deduction, while under a finance lease you can claim a deduction for the whole of the lease.
Compare business car loans
Bigstone Small Business Loan: Borrow up to $5,000,000 for 1 to 5 years. Suitable for purchasing a range of assets including business vehicles.
GetCapital: Borrow up to $750,000 for 1 to 3 years.
Max Funding Business Loan: Borrow up to $300,000 for 1 month to 1 year. Receive funds on the same day. Suitable for financing a business vehicle.
Business Fuel Loans: Borrow up to $200,000 for 3 to 18 months. Invest in your business with a quick cash advance from Business Fuel Loans.
NAB QuickBiz Loan: Borrow up to $100,000 for 1 to 3 years. Suitable for financing business vehicles.
Are there any risks involved with business car loans?
As with any financing option, the most important thing is to ensure you don't choose a business car finance option that you can't afford. Factor in the cost of the vehicle, the regular repayments and the length of the loan term. Consider your long-term cash flow to help work out if the repayment size is manageable for your business.
Another common pitfall is simply not understanding the range of vehicle finance options available and selecting one that doesn't suit your business's needs and budget. Enlisting the services of an accountant can help you find the business car finance option that is right for you.
Have more questions about business vehicle finance?
A novated lease is where an employee enters into a finance lease with a financier, but your employer makes the monthly lease repayments from your pre-tax income. Under a fully maintained novated lease, your employer will use your pre-tax income to pay the lease repayments and the vehicle's operating expenses.
This is where an accountant can help. The right choice will depend on your business and your business finances, so getting some expert help is the way to go.
Matt Corke is the head of publishing in Australia for Finder. He previously worked as the publisher for credit cards, home loans, personal loans and credit scores. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time he has survived the dot-com crash and countless Google algorithm updates.
Microsoft Teams incorporates a very powerful and complex suite of tools built around existing Microsoft products, although its complexity can also be something of a drawback.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Important information about this website
finder.com.au is one of Australia's leading comparison websites. We compare from a wide set of banks, insurers and product issuers. We value our editorial independence and follow editorial guidelines.
finder.com.au has access to track details from the product issuers listed on our sites. Although we provide information on the products offered by a wide range of issuers, we don't cover every available product or service.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan.
Products marked as 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money here.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labelling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
