Business Car Loan

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What is a business car loan?

Business car loans give you the funds to buy a car, or fleet of cars, for your business. A business vehicle loan is generally secured, meaning an asset will be attached to your loan as collateral.

How does a business car loan in Australia work?

Company car finance gives you the cash you need now, so you can continue business operations without delay. Unlike other car finance options, a business car loan gives you the freedom to use your vehicles for any business purpose. You can take control of your car without restrictions placed on mileage or modifications. So you can grow, expand, or maintain your business in any way you need.

Repayments

Repaying your car loan is simple with monthly repayments over a 5-year loan term. Your repayments will include the cost of the vehicle, plus the interest and any other fees associated with the loan. Whether you need a single car, a fleet of vans, or any other type of small or medium vehicle, Oceania Finance is here to help.

Balloon payments

Many business car loans will come with a balloon payment option or requirement. Balloon payment car loans reduce the amount of money you pay each month. In exchange, you will need to pay off the remaining loan amount in one lump sum at the end of your loan.

8 types of commercial car loans

1. Business car loan

This is a secured loan that can be used to purchase cars. You will own the vehicle immediately and make regular repayments over the course of 5 years. Payments are made monthly at a fixed rate.

2. Low doc/ABN business car loans

A low doc business loan, also known as an ABN loan, is another way to get car finance without all the usual required documents. Instead, you can use other ways to prove your credit worthiness.

3. Refinance business car loan

Refinancing a business car loan is another option for businesses. You may find as you get to the end of your loan that you lack the money needed to pay the balloon payment. Or you may need extra finance for another expense. Either way, refinancing your existing car loan could be a practical financial solution for you.

4. Chattel mortgage (equipment loan)

Another way to refer to a secured business car loan. You receive the full sum needed to purchase vehicles and equipment and pay it off over a set term.

5. Finance leasing (operating lease)

You can lease a car or fleet of cars for a period of time. At the end of the lease, you can elect to pay the remaining amount of money and take ownership or take out a new lease.

6. Hire purchase

You can make a deposit or downpayment on the car and pay off the remaining cost in instalments. At the end of the loan, you will own the vehicle outright.

7. Novated leasing

For a novated lease, your employer takes over the responsibility of paying the loan and any other costs associated with running the car, like fuel and maintenance. These costs are then taken out of your pre-tax salary.

8. Line of credit

If you have a revolving line of credit, you can use it to pay for part of, or, the whole cost of a business car.

Benefits of a business loan for car purchase

Business auto loans come with a number of benefits, including:

• You get to buy the car now and pay it off in instalments
• Lower interest rates than personal car loans
• Tax benefits:–
  • Claim the interest paid on your business car loan
  • Instant asset tax write off – temporary full expensing
  • Claim the kilometres and fuel, registration, and insurance
• Choose your own insurance and make any changes you want
• No restrictions on usage or kilometre limits
• Loan can be under business or individual’s name

Who can get business car finance?

Business car loans are suitable for the following people:

• Business owners
• People who are self-employed or sole traders
• Employees who use their car for business purposes – if you are an employee, you will need to speak to your employer first

Eligibility for a business auto loan

Although eligibility requirements will depend on the individual lender, you will typically need to:

• Be an Australian tax resident
• Have an ABN/ACN
• Have good credit – if your credit isn’t perfect, a business car loan broker can help determine if a business car loan is suitable for you
• Use the car mostly for business purposes

Required documents

As with eligibility requirements, the exact information you need to provide will vary between car finance lenders. But, at a minimum, you will need to provide the following:

• Australian Business Number/Australian Company Number
• Personal identification
• Business verification

Low doc business car loans are also available for people who do not have the usual documentation or want an alternative, more flexible application process.

How to apply for a business car loan

Apply online

Many lenders in Australia have an online application process you can use to apply for your car loan.

Some online lenders offer ‘instant’ approval or approval within 60 seconds. What this usually means is that you will get fast pre-approval while your application is assessed further.

In-store

It is also possible to apply in-store with some banks or private lenders.

Apply through a car loan broker

You could also apply for business car finance through a loan broker.  When you use a broker the weight of the application process is taken off your hands. They assist you across the whole process – from analysing your best choices to negotiating with the lender and submitting the paperwork.

Tips for business car loan approval

It’s not as easy as it used to be to get finance for your business. But there are things that you can do to improve your chances of approval.

Here are some top tips for getting a loan approval:

• Build your credit rating up to good or above
• Research different types of loans and take note of eligibility requirements
• Compare lenders to find options most compatible with your situation
• Reduce disposable spending and credit card use
• Pay off other loans first so you’re not overcommitted
• Use the services of a professional loan broker

We have over 20 years of experience getting positive loan results for our clients. When you’re looking for your best chance at business car loan approval, get in touch with our friendly Oceania Finance brokerage experts.

Loans for every business

Need a business loan for another reason? Learn more about these loans below:

• Business trailer loan
• Truck finance
• Equipment loans