Business car finance is an equipment loan for business owners looking to finance a vehicle purchase. Business car finance functions similarly to consumer auto loans. You, as a business entity, borrow money to purchase a car, truck, van, or another form of transportation and the vehicle acts as collateral for the loan. The difference between business car finance and some other business loans is that you may not have to sign a personal guarantee promising you’ll pay back the debt with personal assets if your business defaults. These loans also tend to carry lower interest rates than unsecured business loans because the built-in collateral reduces the lender’s risk in the transaction. Because the loan is borrowed directly by the business, lenders will typically base the loan terms on said business credit history, as opposed to the business owners personal credit history. If a business credit history hasn’t yet been established, a personal guarantee may need to be provided, which can affect personal financial outcomes and credit history if the business defaults on the auto loan.
Chattel Mortgage
A commercial car finance product where the vehicle is used predominately for business purposes (more than 50%) for business purposes.
Benefits of a Chattel Mortgage include:
Fixed interest rate
Trade in and deposit options
Possible GST Savings (Ask your Accountant)
Finance Lease
The financier purchases the equipment on behalf of the customer, who then pays the financier a fixed monthly lease rental for the term of the lease.
Benefits of a Finance Lease include:
Tax deductions for the lease payments can be claimed
A residual is applied to a lease, lowering monthly payments
Your equipment does not sit “on your books” as an asset/liability
Low Doc Loans
Haven’t completed your Tax Return or still finalising your accounts? If you are a business or Sole Trader looking to purchase a car, we have a number of Low Doc options that make organising finance quick, easy and hassle-free.
