Apply for Business Vehicle Finance

Business Vehicle Finance

Is your business starting to really grow and you are looking to expand your fleet of trades vehicles or maybe you need to get your first business car. There is a number of tax benefits to getting a new car for the business. It only takes a few minutes to apply, it’s free and our team will help you through the process.

Finding the right financing option for your business vehicles can be confusing as there are usually so many options in the market. Some of these include a finance lease, chattel mortgage, commercial hire purchase, line of credit, novated lease and so on.

 These business vehicle finance options are the best routes to take for business owners for various reasons and just like the other loans, there are a number of things you need to consider before applying for these types of financing options.

Understanding them gives you an upperhand in choosing the right car loan that your business needs. Whether you are a small business or an independent contractor, read along to find out which financing deal is the right one for you.

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Business Vehicle Finance Options

A Chattel Mortgage is similar to a secured car loan in the sense that a financier loans you money to purchase a business vehicle and you take ownership of the car upon purchase but the vehicle will act as security to the lender until you pay off the entire loan. Therefore the “chattel” is your car and the mortgage is the loan itself. The difference between this loan and a secured car loan, is that a Chattel Mortgage is mostly used by business owners and operators eg. tradies and its a loan specifically built for commercial car purchases. Some financial institutions call it a car or equipment loan.

A Commercial Hire Purchase Loan is a finance product used by business owners where they get to hire business equipment, cars, trucks from a lender for a fixed monthly repayment over an agreed period of time.The Lender may agree to purchase the car or machinery on your behalf then hires it back to you over a set period of time. Once you complete making the repayments in full as per the contract including any interest fees, that’s when you get to own the asset permanently.

A Novated Lease is a financial option that involves an agreement between an employee, employer and a lender. A third party is involved in the car purchasing agreement whereby in this case the third party is your employer.This car loan is also known as “Salary Sacrificing” a car and it is suitable for employees who want to finance their vehicle as part of their salary package. In simple terms, it means your employer pays for your car lease and car running costs out of your salary package.

A car lease or finance lease is a financing option that enables business owners, employees and also the self-employed to use a car while having the benefits of ownership without actually owning it. Once you find the vehicle of your choice, it will be purchased on your behalf by a financier who is referred to as the Lessor and rented to you as the borrower referred to as the Lessee. As the borrower, you will pay a fixed monthly lease rental for the term of the lease.

What is a Business Vehicle Loan?

A business car loan is a type of financing that helps meet the needs of businesses and companies when it comes to purchasing or leasing a vehicle for business purposes. Your options for these financing options vary based on your business, vehicle use and if you would like to own the vehicle in the end. 

These options have different benefits for example you could opt for a finance lease if you are not in a financial position to purchase a car or to take out a loan. Most business car finance products in Australia are secured, where the vehicle acts as collateral and can be taken from you by the lender if you don’t make your repayments as agreed.

Most business vehicles are eligible for finance such as trucks, cars, utes, motorbikes and vans. It’s important to know what your requirements are, the kind of vehicle you need and whether you can afford it. Ask yourself, whether an ute or a van would be more suitable for the kind of business you run. 

Note that you need to use the car primarily for business purposes therefore, you can purchase or lease a vehicle that is unsuitable for your business such as a sports car. Banks generally offer good interest rates for the loans but their application process tends to be longer. Applying through a finance broker such as Braid Finance is more convenient as they tend to handle the process themselves.

Refinance Car Loans

When comparing your options, be on the lookout for the following.

  • Interest rates. The interest rate charged on your loan determines how much you will end up paying at the end of the loan term. Always be aware of the rate you are being offered.
  • Loan term. Loan terms can be set for short periods of time such as 6 months to a year or longer periods such as 5 years and above. Going for a shorter term means your interest rate will be lower but monthly repayments will be higher whereas for longer terms, your interest rate will be more but less monthly repayments.
  • Minimum repayments. It is important for you to be aware of what your minimum repayments are for your loan and whether it fits well with your income and budget.
  • Fees you will be charged. There are lenders who charge a monthly account fee on top of your loan or early repayment fee. Make sure you are aware of any fees that are applicable to avoid having to pay more money than you had expected.

To help you narrow down your choices, keep in mind your business needs. If you are an electrician or are in the industry of good delivery services, you will need a car with plenty of room and storage space such as a van. Secondly, note the operating costs involved.This include, insurance, roadside assistance, registration, repairs and so on. 

Thirdly, ask yourself whether you want to retain ownership of the vehicle. Some options give you ownership once you start repaying the loan while others grant ownership at the end of the loan term. Last but not least, note the tax benefits. There’s a wide range of tax benefits available if you are purchasing a vehicle to use for business purposes such as claiming GST credit.

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Braid Finance is always more than happy to answer any questions you may have. All of our customers applications are individually assessed. If you have any urgent questions while we get back to you. Get in touch with us today.