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Business Car Finance: What to Compare

By Mary Nebotakis, Managing Director, Natloans, B. Eco, Dip. Financial Services

Business Car Finance: What to Compare Before You Buy

A car can be an essential part of running a business. Whether you visit clients, travel between sites or provide a vehicle for a team member, the purchase needs to work for your business as well as your budget.

Business car finance can help spread the cost of a vehicle over time. But choosing a loan involves more than finding a manageable monthly repayment. The amount financed, fees, loan term and any final payment all influence what you pay and how the commitment fits your cash flow.

Here are the key questions to work through before you buy.

Will the car be used mainly for business?

Start by explaining how you intend to use the vehicle. A car used for client visits may also be the family car on weekends, while a vehicle allocated to a sales representative may have a different pattern of use.

Your broker needs an accurate picture of the proposed business and personal use to help identify suitable finance options. Having an ABN does not automatically make every car purchase eligible for a business loan. The lender will assess the application against its requirements.

What finance structure are you considering?

One common business vehicle finance option is a chattel mortgage. Under this arrangement, the business purchases and owns the vehicle, and the lender takes security over it until the loan is repaid.

Other arrangements, including a finance lease, may also be worth discussing. With a finance lease, the financier owns the vehicle during the lease. Ownership and end-of-term arrangements differ between products, so it is useful to understand what happens throughout the agreement and at its conclusion.

Ask your broker to explain the available structures in plain language and discuss the accounting treatment with your accountant before deciding.

What will the finance cost overall?

When comparing business car loans, look beyond the advertised interest rate. Request a clear breakdown of:

A longer term can reduce the regular repayment while increasing the time you remain committed to the loan. Consider how long you expect to keep the vehicle and whether you are likely to change it before the finance ends.

Would a balloon payment suit your business?

A balloon is a lump sum payable at the end of the loan. It can reduce regular repayments, but it leaves an amount that you need to plan for. Compared with an otherwise equivalent loan without a balloon, retaining that balance generally increases the interest paid over the term.

Think about how you would meet the final payment. Selling the car or applying to refinance may be possible, but neither the future sale price nor a new loan approval is guaranteed.

What should you prepare before applying?

Your broker may ask for identification, business details, information about existing commitments and a vehicle quote. Depending on the lender and application, financial statements, tax returns, BAS or bank statements may also be required.

Discuss finance before making a purchase commitment. An initial indication of eligibility is different from final approval, and outstanding lender requirements still need to be met before settlement.

Compare business car finance with Natloans

Natloans’ asset finance brokers can help you explore business vehicle finance options, understand the proposed repayments and navigate the application process. We work with business owners across Australia, including sole traders and companies.

Buying a work ute? Read our guide to ute finance for business. Adding more than one vehicle? Explore business vehicle finance for a growing fleet.

Contact Natloans on 1300 955 791 or enquire online to discuss business car finance for your next purchase.

General information only. Finance is subject to lender approval, eligibility, terms and conditions. Speak with your accountant about the tax treatment of your vehicle and finance arrangement.

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