Car Finance - Personal or Business?

Car Finance - Personal or Business?

Looking for car finance can be confusing and there are several ways that you can go to get a car loan.
Questions that we will ask are:

Is the car for business use?
If you answered “Yes” – Keep reading and we will discuss a couple of different options that you can consider.

Is the car for personal use ?
If you answered “Yes” – Please follow this link and we will talk about the personal finance for a car loan.

car finance

Business Car loans

A car loan or truck finance that is used mainly for business purposes is one of the most common types of finance for businesses with an ABN.

If you are a trades person and you need a vehicle for work, then a Chattel Mortgage may very well work for you.

Chattel Mortgage

A chattel mortgage has a similar structure to a fixed-rate traditional home loan. The finance provider uses the car or equipment you get as the security for your loan.
Chattel refers to the car or equipment, and mortgage refers to the loan to purchase it.
Some finance providers, may also call it a car or equipment loan.

Benefits of a Chattel Mortgage

Repayments over 2-5 years

Interest rates are lower the unsecured loans – available as fixed or variable

Repayments can be fixed at the same amount each month – or can adjusted to your business cash flow

The car or truck is an asset and is owned upfront – so the asset appears on your balance sheet (the loan will appear as a liability)

Balloon payments or residual payments can be set if you prefer lower monthly repayments but be prepared for them at the end of the loan and make sure it is a manageable amount at the end of the loan in case you want to simply sell the vehicle and pay off the finance.

Tax Implications

GST inclusive of the purchase price – as a business you are entitled to a input tax credit upfront.  You may be entitled to depreciation of the vehicle depending upon your business usage.

Novated Car Lease

What is a Novated Lease?

With a novated lease, you’re not limited to any particular car type, model or make, unless stipulated by your employer for example you need a van for deliveries or you need a car that will represent the company in a particular way.
In most cases, you’re free to choose the car you wish to lease, whether it’s new, used, or even your existing car if it meets the lease conditions.

Finance for a novated lease may be beneficial for your situation.
The loan is between the loan applicant, finance company and the employer.  You can apply for the loan with or without salary packaging – contact your HR Department to see if it is an option available to you.

Benefits are:

  • No GST payable on the vehicle – saving your 10% of the purchase price
  • Save on Tax – your total payment will include your running costs and services – paid with Pre-Tax Income
  • Fuel Savings available

Salary Packaging options mean you are able to include all the running costs for your vehicle – including any fringe benefits tax (FBT) which can be deducted from your pre-tax salary. 
The maintenance and running costs are budgeted for, with funds set aside from your salary each pay period. These can cover costs such as:

  • Registration
  • Servicing
  • Maintenance
  • Insurance
  • Fuel
  • Tyres
  • Car washes.

Please note though that this may increase your nett income. 
Please contact us to discuss the best car finance options for you and your business.

Sourcing A Vehicle With A Car Broker

Need a vehicle but not sure where to start?  Undecided between buying a used vehicle or a new vehicle?  We have partnered up with a Car Broker, who can help find your ideal vehicle. 
Sourcing the right vehicle at the right price can save you thousands of dollars, depending upon your choice of vehicle.  This can make the difference between buying a new vehicle instead of a used vehicle.

Let’s face it, car shopping can be arduous and a real test of patience so take up our option to find your vehicle, while you relax in the comfort of your own home.