Business Vehicle Finance

Running a business is a time-consuming undertaking.  AAA Finance is here to assist businesses cut through the finance red tape and take the hassle out of business vehicle finance. 

Types of business vehicle finance
What can be purchased using business vehicle finance?
Advantages of business vehicle finance
Business vehicle finance calculator
Apply for business vehicle finance

How to qualify for business vehicle finance?

  • Business loans are only for ABN holders.  The business structure can range from sole traders and self-employed individuals to partnerships, trusts and companies to large corporations.
  • The vehicle must be used for over 50% business related use.  That is the vehicle must be used by the business to generate income.
  • Proof of income documentation.  The type and amount of documentation required varies with each type of business car finance facility.  Please read below for more details.

Types of business vehicle finance

There are 3 options for businesses looking to finance a car – no doc car loan, low doc car loan and full doc car loan.  Each option is a type of chattel mortgage.  The car or ‘chattel’ is used as security against the loan that is repaid via regular monthly repayments.  The difference between each option is the amount and type of financial paperwork required by the lender.

1. No Doc Car Loan

As the term implies, there is no financial documentation required for a no doc car loan.  Businesses will need to estimate their net turnover and gross profit.  A signed declaration by the ABN holder stating that they have the capacity to repay the loan is a requirement of the lender.  No doc car loans suit established business that have been operating for a number of years.  The ABN will need to be GST registered and the individual ABN holder asset backed.

2. Low Doc Car Loan

Low doc car loans require some type of proof of income.  This could be interim financials such as business activity statement (BAS), profit and loss statement, bank statement or an accountant’s letter stating projected earnings.  This will prove that sales or revenue are passing through the business books and demonstrate to lenders that you have the capacity to repay the loan.

3. Full Doc Car Loan

A full doc car loan requires up-to-date financials for company structures or personal tax returns along with notices of assessment for sole traders.  This type of business car finance is suitable for businesses that have been operating for a short term, GST unregistered and the individual ABN holder not being asset backed. 

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What can be purchased using business vehicle finance?

Any vehicle that is used predominantly for business use can be financed under your business ABN.  ‘Predominantly’ is defined by the ATO as over 50% of use.  Travel from home to work is not considered business use.  However, if you are a home-based business you can claim travel to a client premises, to purchase equipment, do the banking, go to the post office and to see your accountant.  This also applies to mobile service businesses such as cleaners, bookkeepers, plumbers, builders and so on.  You need to travel to generate income and therefore it is deemed business related.

Any type of vehicle can be financed using a business vehicle finance facility.  From cars, vans, trucks, equipment, heavy machinery, earth moving equipment, factory specific machinery.  The list is endless.  As long as it is deemed predominately business-related use then it can be financed.

Vehicle accessories can also be included in the business car finance amount.  When purchasing a new vehicle, you may require specific additions or modifications to suit your business needs.  These could include ute canopy, draws, roof rack, tow bar etc.

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Advantages of business vehicle finance

1. Tax deductions.  The GST portion of the purchase price, interest charged on the business car finance loan and the instant asset write off are all claimable tax deductions.

2.  Competitive interest rates.  Business loans attract a more competitive interest rate than consumer loans. Interest rates are at all time lows. Now is the time to lock in your interest rate today and get a new car!

3.  Fixed monthly repayments.  Regular direct debit repayments commence at the beginning of the loan.  This allows you to set and forget your loan repayments and get on with running your business.  

4.  Balloon payment option.  A balloon payment is a lump sum payment due at the end of the loan term.  Having a lump sum due at the end of the loan means that the month loan repayments are reduced for the term of the loan.  Utilising a balloon payment can free up much needed business cash flow.

5. Loan terms from 1 to 7 years.  The longer the term the lower the repayments.  The term can be set to ensure repayments fit within your budget and suit your business needs.

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Business vehicle finance calculator

Budgeting to ensure sufficient cash flow is imperative for all business owners.  Our business car finance calculator allows you to determine if a new vehicle purchase will fit within your budget.  Simply input your loan amount, loan term in years and interest rate.  The interest rate is determined by your profile, credit history and the type and age of the vehicle you wish to purchase.  The calculator will work out a monthly repayment based on your inputs.  

You can also request a refined quote from our finance experts.  A AAA team member will be able to determine an accurate interest rate after asking you a few simple questions.  They are also there to answer any of your questions regarding business car finance.

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Apply for business vehicle finance

The AAA Finance team has over 95 years of combined finance experience.  We know what we are doing, and we do it very well.  In addition, we have access to over 40 different lenders.  This means we have a lender to suit every type of business scenario.  Make AAA Finance your first choice when it comes to your business car finance.  Call 07 5493 1222 or make an online enquiry and one our finance experts will be in contact promptly.

FAQ’s

Can a business finance a vehicle?

Yes.  If you have an ABN and the vehicle is to be used predominantly for business related activities, then the car can be financed under the business.  Business vehicle finance has many advantages including tax breaks, fixed monthly repayments with balloon options and competitive interest rates.

How does business car finance work?

The car is financed under your business ABN and the business owns the vehicle.  There are fixed monthly repayments for the term of the loan with balloon options available.  There are 3 types of business vehicle finance – no doc car loan, low doc car loan and full doc car loan.

How do you get a business loan for a car?

You will need an active ABN and be able to justify that the car is to be used over 50% of the time for business related tasks.  Apply for a business loan through an experienced finance broker with access to a large panel of lenders.  AAA Finance specialises in business vehicle finance.

Can I buy a car using my ABN?

Yes.  Business car finance requires you to have an ABN.   Your business can operate as a self-employed individual, partnership, trust or company structure.  Expenses incurred through the use of the car are tax deductible. 

Business Vehicle Finance | AAA Finance

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Useful Link

This ATO website link explains what can be claimed as a tax deduction for motor vehicle expenses.  https://www.ato.gov.au/Business/Income-and-deductions-for-business/Deductions/Deductions-for-motor-vehicle-expenses/

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