What is a business car loan?

A business car loan is a type of financing that allows you to purchase vehicles for your business operations. 

You can obtain business vehicle finance through a financial institution or lender, specifically tailored to purchasing vehicles for business purposes. 

Loan terms, interest rates and repayment schedules can vary and there are different types of business vehicle loans available, such as hire purchase, finance lease or a chattel mortgage, which is a type of secured business car loan. 

You can apply for a business car loan if you own a business, are self-employed, or if you require a car for business purposes.

What are the business car loan terms?

Business car loan terms typically range from one to seven years and the repayments are generally fixed for the term. 

Depending on the type of car loan you choose, it may include the option to have a balloon payment. This allows you to pay the residual amount at the end of the loan term, while keeping your monthly repayments low. 

At NAB, there are different types of financing options available for your business car loan:

Your NAB relationship manager can help walk through your options to help you decide what car finance solution suits your business goals and circumstances. 

Alternatively, you can request a call back from one of our specialists to discuss your needs and see what the best option is for you and your business. 

The benefits of getting a business car loan

Obtaining car loan finance means you can keep cash flowing with flexible payment options, competitive interest rates and the potential of balloon payments.

There may also be additional tax benefits when purchasing a car with a business car loan.

For example:

  • You can potentially claim tax on the interest you pay on your car loan repayment. 
  • There may be government incentives for your business when purchasing a business car, such as an instant asset write-off, opens in new window. This form of government support may change over time and it’s important to do your due diligence before purchasing.
  • Claim on depreciation value of the vehicle.
  • Claim on expense such as fuel, registration, and insurance. 
  • Claim GST credit: The GST paid for business cars, vehicles or equipment may be, depending on your circumstance, claimed back if they're being used for business or commercial purposes.

We recommend seeking independent tax advice for your situation as we can’t provide tax advice.

What are the types of business car loans available?

There are various types of car loans that you can apply for.

Chattel mortgage 

The most common car loan is called a chattel mortgage, where the lender offers a loan to the business to purchase a vehicle but uses it as security against the loan. 

Hire purchase loans

There are also hire purchase loans, where the car is leased from the lender for a fixed period. 

Financial lease

The finance lease is where the financier owns and leases the car but permits the transfer of ownership to the borrower at the end of the lease once all contractual obligations have been met. 

Learn about different options for equipment financing for your business.

What are the eligibility requirements for obtaining a business car loan?

If you want to apply for a business car loan, keep in mind that each financial provider may have varying requirements.

For example, if you’re a sole trader applying for a business car loan, you may need to meet the following requirements:

  • A sole trader, sole owner of a company, and be authorised to apply for finance and business credit.
  • 18 years of age or older.
  • Eligible to work in Australia.

For businesses applying for a business car loan, you may be required to have

  • A good credit rating.
  • Tax return and business financial statements from the last two years.
  • Business activity and trading for over 12 months.
  • A current Australian Business Number (ABN) registered for at least two years.
  • No current bankruptcy issues.

What else should I consider when applying for a car loan?

Know the purpose of purchasing and financing your business car loan

A new business car loan can help you start or expand your business, however it’s important to consider the potential impact it can have on your cashflow. If you’re a new business, it’s worthwhile to prepare a business plan and cash flow projection. 

Learn more about what to consider when you are looking to finance a new vehicle

Ensure that your business financials are organised and accurate

Prepare your business financials in advance and ensure they’re up to date when applying for a car loan. This allows both you and the financier to have a sound understanding of your business income and serviceability.

Ensure you maintain a good credit history

Creditworthiness matters because banks take responsible lending seriously. 

Improve your credit score by paying your bills or debt repayments, as well as periodically checking if your credit file is accurate. While a bad credit history could impact the approval of your application, it doesn’t necessarily mean you won’t be approved for a loan.

Get in touch with our business specialists to see how we can help you.

Ensure you have sufficient cash to cover costs

There may be other costs associated with purchasing a car for your business, including registration, petrol, tolls, repair, and servicing fees. Because of this, it’s important to consider the ongoing costs included in your business car loan repayments.  

Important information