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.
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.
- You must use the vehicle for over 50% business related use. That is, you can justify the vehicle generates income for your business.
- 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 which is repaid back via regular monthly repayments. In short, the main 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 requirements for a no doc car loan. However, businesses will need to provide an estimate of their net turnover and gross profit. A signed declaration by the ABN holder stating that they have the capacity to repay the loan is also a requirement of the lender. This type of loan is suitable for established business that have been operating for a number of years. In addition, the business ABN must be GST registered and the individual ABN holder must own property.
2. Low Doc Car Loan
This type of loan requires 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 also demonstrates 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 a business that has been operating for a short term, is not GST registered and also for an individual ABN holder that is not asset backed.
What can you purchase using business vehicle finance?
Any vehicle that is used predominantly for business use can be financed under your business ABN. The ATO defines ‘predominantly’ as over 50% of use. Please note, that 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. To generate income you need to use the vehicle to travel and therefore this is deemed business related.
Any type of vehicle can be financed using a business vehicle finance facility. For example cars, vans, trucks, equipment, heavy machinery, earth moving equipment and factory specific machinery. In fact, the list is endless. If the use of the asset can be considered business-related, 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. This could include a ute canopy, draws, roof rack, tow bar on so on.
Advantages of business vehicle finance
1. Tax deductions. The GST portion of the purchase price, interest charged on the business car finance loan as well as 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. 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. As a result, you can set up your automatic 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. Hence there are lower monthly loan repayments for the term of the loan. By incorporating a balloon payment in your loan you can free up much needed business cash flow.
5. Loan terms from 1 to 7 years. The chosen term ensures repayments fit within your budget and suit your business needs. For example, the longer the term, the lower the loan repayments.
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 a number of factors. These include 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.
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. Consequently, 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.
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.
The car is financed under your business ABN which means the business owns the vehicle. There are fixed monthly repayments for the term of the loan with balloon options available.
You need an active ABN and you also need to be able to justify that the car will be used 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.
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.
This ATO website link explains what motor vehicle tax deductions are claimable. https://www.ato.gov.au/Business/Income-and-deductions-for-business/Deductions/Deductions-for-motor-vehicle-expenses/
* Your actual interest rate will be based on a number of factors, including the type and age of the asset you are seeking to purchase; the information you provide during your application and the term of the loan. This rate may be different from our lowest advertised rates. The Comparison Rate is calculated on a Secured Loan of $50,000 fixed for a term of 5 years, effective 9/11/2023 and subject to change. The Comparison Rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different comparison rate.