BUSINESS CAR FINANCE
If you are looking to purchase a new vehicle for your business, we have various financing options available for you. A great way to finance the vehicles you need for your business is through a business car loan. However, as with personal car loans, there are many things to take into consideration when you want to apply for this type of finance. There is a need for proper understanding to ensure that the car loan you are getting for your business is the right one.
WHAT DOES A BUSINESS CAR LOAN MEAN?
It is a type of financing that is tailored to meet the needs of your business, either to buy or lease vehicles for business activities. In Australia, most business car loan products are categorised as secured loans. This means if the borrower fails to pay the loan, the vehicle will be seized. In essence, the vehicle serves as the collateral.
If you are thinking of purchasing a new vehicle to enhance your business operations, be it a start-up or an established business, your options include:
- Financing through dealership
- Finance the car from any lending institutions or banks
- Working with a finance broker
- Financing through specialised credit companies
Using a car loan broker like Auto Car Loans is a convenient business car finance option. As a loan broker or representative of loan providers we have access to more than 50 lenders. That helps you get the most competitive rates, many low doc options, and also access multiple approval pathways.
There are lots of various business car loan applications offered by lenders and banks. However, often vehicles are required to be used for majority business purposes. Often the business car finance lender will need confirmation from your employer or accountant that the vehicle is for over 50% business use.
The business use portion of car loan interest payments are usually tax deductible, but you should confirm with your accountant. You should also ask them about the instant asset write off which allows business owners to immediately depreciate the full cost of the car as a tax deductible expense, rather than adding it to the balance sheet and amortising it over several years.
BUSINESS CAR LOAN OPTIONS
There are five different types of business car loans with each of them having its merit and demerit. Some are better suited for buying a single business car while others are better suited to buying an entire fleet of vehicles for business operations.
See the different types of business car loans we can offer below:
- Chattel mortgage - Our most popular business car loan product by far! With a chattel mortgage, you can obtain a loan that can be used to purchase any type of car or equipment needed to keep your business running smoothly. In a business car loan term, it applies to the car or fleet of vehicles that your company or business needs. A chattel mortgage enables you to become the instant owner of the vehicle. You cannot sell the car until the loan term loan has been completed because the Chattel mortgage is secured. However, since this is a secured loan, there is a better chance of you getting a good interest rate from your loan provider.
Repayments for the chattel mortgage are fixed for the term of the loan. Also, there is an option to make a balloon payment at the end of the loan term, which will reduce your monthly repayments. This balloon payment will depend on either the type of vehicle being purchased or the loan term, but is often 20-30% for a 5 year loan.
- Car loan - This first type of professional auto finance usually lasts between two to five years and is a secured loan. Standard consumer car loans can be used by business users who then just claim the business use back in their tax return. Here at Auto Car Loans, we can help you access secured car loans. Applying for a car loan with us is usually quick, easy, and can be done online. We will match you with a lender that will give you repayment plan options to choose from based on your business needs. You can also choose the balloon payment options.
With this type of option, you will also have the option to sell the vehicle to cover the loan balloon payment that is needed to be paid. You can also claim tax deductions for interest payments if the vehicle is used strictly for business purposes if it’s been used for over 50 percent of the time.
- Commercial Hire purchase - Not very common for the last 15 years, this type of business car loan involves the loan provider buying the entire vehicle needed for your business operations on your behalf and then sells it back to you. An initial deposit must be paid accompanied by monthly instalment payments for the number of years agreed between you and your provider (usually 1 to 7). Ownership of the car passes to you as soon as the full payment of the car has been made.
In hire purchase type of business car loan, you have several repayment options, which include making a balloon payment at an agreed time to reduce the monthly repayments, as well as determining the payment schedule and contract terms based on business needs.
- Finance lease - Again not as popular as they once were, this type of business car loan involves the lender and the borrower coming into an agreement that the former purchases the vehicle and the privilege to lease it is given to the latter. Ownership of the vehicle will remain with the lender until the end of the contract when the borrower can buy the vehicle with the final payment.
With a finance lease, the borrower bears the cost of maintaining and servicing the vehicle even though he does not own the vehicle yet.
- Novated Lease - While the novated lease isn't just for business purposes, it can be a tax-efficient way for employees to purchase a new car even if the salary they earn is not on the high side, or they don't use the car primarily for work or drive long distances.
For an employee looking to purchase a new car, getting this type of business car loan as part of a salary package CAN be an effective way to achieve that. Depending on the individual circumstances of the employee, the arrangement can result in GST (goods and services tax) savings and income tax. HOWEVER, despite the tax savings novated leases often come with higher interest rates and very little transparency over rates or insurance costs, meaning they can often work out more expensive than other loan options.
HOW DO YOU DECIDE THE BEST OPTION?
Your business needs should be the deciding factor on the type of business car loan you should get. There are a few questions you must answer before taking a step further. What is the purpose of buying the vehicle? Can I afford to lease or purchase the car? Also, when deciding which business car loan to get, you need to consider the cost of the vehicle, interest rates, monthly repayments, and balloon payment.
BENEFITS OF CAR FINANCE WITH AUTO CAR LOANS
For many people that come to us at Auto Car Loans, car finance helps them get on the road very quickly. Besides, you will get to enjoy some or all of these other benefits:
- Borrow up to 100% of the total cost of the car
- Taking out a car loan without having to pay a deposit
- Ability to add a residual balloon payment at the end of the loan
- Loan term that is convenient for you
- Fast and easy loan application
- Multiple approval pathways for non-conforming applicants
- We select the best loan offers from our panel of more than 50 lenders
- Competitive interest rates
Here at Auto Car Loans, we work with over 50 lenders, and that ensures if approved, you could see a result on the same day.
You could qualify for car finance if you are above 18 years of age. So, we encourage you to apply with us if you are an adult. We offer an effective and straightforward process to determine eligibility, and in no time, we will match you with a leading lender that meets your exact requirements. We save you the time and stress of searching for a suitable lender, providing you with an efficient car loan at quick turnaround times.
Getting started is easy. You only need to submit a simple application by visiting https://autocarloans.com.au/apply
, and then fill out your information, it takes only 5 minutes. If approved, we will match you with our top lenders as fast as possible.
WHY CHOOSE AUTO CAR LOANS FOR YOUR CAR FINANCE?
- We can offer significant savings that banks or dealerships cannot give you
- We offer efficient and quick turnaround times
- Unique and custom service tailored to individual needs
- Access to a variety of leading lenders, so there is an option suitable for your needs
- We can offer loans without early payout penalties
- Expert loan consultants ready to help.
OTHER USEFUL INFORMATION
As we have mentioned before, we have a close relationship with a wide range of lenders specialising in car loans. We work closely with them to ensure that you have an easy and simple process. Trust us, we know how important your time is and we want to make sure you get a car as fast as possible. Therefore, our car loan consultants will take the burden of finding a suitable lender off your shoulders and get to work to ensure you purchase your vehicle in no time.
Auto Car Loans is committed to ensuring you get a great car finance deal so that you can drive away in your new car sooner.
Client satisfaction is at the core of our service.
CONTACT US TODAY
If you need a car loan to purchase your next vehicle, then feel free to fill out the application form by visiting the link above. Alternatively, contact us today on 1300 301 051
to speak with one of our car finance consultants that will guide you throughout the whole process.
DISCLAIMER : The thoughts and opinions conveyed on this website are those of the authors only and are of a general nature. This does not constitute financial or general advice to you from Auto Loans Group. You should seek your own independent advice from a professional which is specific to your circumstances before considering any of the items referred to in this article, including finance, insurance, and car buying.