Business Vehicle Finance

This is a form of business finance that is used to acquire or lease a vehicle. Business vehicle finance is an essential product because many businesses depend on vehicles actually to provide their services. In Australia, this finance usually comes as a secured loan where the car is used as collateral for the loan.

Where you can get business vehicle finance

This is a popular form of finance, so you have unlimited options when it comes to lenders. Banks, credit unions, finance companies, dealerships, etc. are just a few examples of lenders who will finance your business vehicle. The criteria for qualification and loan terms usually differ from lender to lender. Generally, banks have the strictest qualification criteria and have the longest application process.

A business vehicle finance is available for anyone who plans that to use the car for business purposes for a minimum of 51% of the time the vehicle would be used. Apart from that, any business can apply for finance regardless of size or industry.

There is also no limit on the type of vehicle you can buy through this finance. From Sedans, UTEs, to Minivans and Tricks, you can purchase any vehicle that your business needs. You should, however, remember that the cost of the car, age, type, and other factors will determine the interest you will pay. For instance, new cars usually have lower interest rates than used vehicles, and some lenders do not allow borrowers who are purchasing used cars to use it as collateral for the loan. Heavy-duty vehicles such as trucks and haulage vans may also carry higher interests.

Business vehicles finance options

There are several options when it comes to business car finance, with each having where it works best. For example, some finance is suitable when purchasing a fleet of vehicles while others work best with single-vehicle purchase. Finance options include:

 

  • Chattel Mortgage: The term for this is between 1 and 7 years, and using it offers you tax benefits. The flipside is the purchase would be recorded on your balance sheet.
  • Hire purchase: This may require an upfront deposit, but it gives you possession of the vehicle with instalment payments. It lasts for a maximum of 7 years at the end of which vehicle ownership transfers to you.
  • Line of Credit: This is usually provided for high earning businesses who get access to funds they can use to buy a vehicle.
  • Operating lease: You can use this to get a business vehicle which you’ll return at the expiration of the lease. The rental payments are usually considered tax-deductible business expenses. There is also a finance lease which is similar except that you have the option of buying the vehicle at the end of the lease.

How to Apply

You can use either streamlined finance application (for vehicle finance, not more than $150,000) or standard finance application (for vehicle finance more than $150,000 or business that has not been in existence for up to 12 months)