Car Loans For Business Owners in Australia

In terms of business car loans, it’s important to understand all of your options when it comes to car loans for business owners and self employed car finance applicants. This allows you to take the proper time to weigh the pros and cons with each choice and to determine which would suit your financial situation best. Here are some of the most popular business car loans in Australia.

Commercial Hire Purchase or CHP

With a CHP, the financier buys the cars and loans it to the consumer for an agreed upon period of time. This can be used for individuals and businesses alike. Monthly payments are made during the loan period and after payment, the vehicle is then transferred to the consumer. This type of loan offers flexibility in terms of financing the total price as a deposit or even a trade-in. The repayment period and interest rates for a CHP are fixed. This makes it easy to change it so that it suits one’s budget best. There is also no GST on repayments associated with CHP.

Chattel Mortgage

With a chattel mortgage, the financier advances money in order to buy the vehicle. They hold the mortgage over the car which is used as security for the loan. Borrowers can finance the total purchase price or make a deposit or use a trade-in if they have one. A residual payment is placed at the end of the term known as a balloon payment. The benefit to this option of car loan for business owners is that the driver takes ownership at the time of purchase. There are flexible contract terms and fixed repayment amounts, which can be customised to any budget with a chattel mortgage. All repayments are exempt from GST. Also, interest is charge with this loan and depreciation and they are both tax deductible for businesses. There are also lower interest rates because the finance is secured against the car itself.

car loans for business owners in australia

Commercial Vehicle Lease

In terms of business car loans, a commercial vehicle lease is another financing options. A finance lease is one where the financier buys the car and leases it to the driver. This offers immediate use of the vehicles. This type of lease is great for businesses when they need business-only vehicles. The motorist pays a fixed monthly payment and is responsible for the maintenance and risk of the car. At the end of the lease period, the motorist can return, refinance or buy/sell the car for the residual or balloon payment. Repayments are tax deductible and GST is paid. The interest rate is fixed and low too. Another type of commercial vehicle lease included in the car loans for business owners is an operating lease. This loan type is where the financer buys the vehicle and rents it the driver, but they retain ownership during the rental period. The driver has no risks associated with ownership. At the end of the rental period, the driver can buy the car, continue to rent or

Standard Loans

The last type is a standard loan that is given to a borrower from a bank, whether an individual or business. The financier lends the money to buy the vehicle. This loan can be secured or unsecured, which has a higher interest rate. The vehicle is the security of the loan, and the financier will require it is fully insured at all times. Some benefits is that monthly payments are the same for the entire loan period, there is a low fixed and variable interest rate and flexible time for repayment period. Ultimately when considering business car loans, it’s best to understand each type available to make the best choice for your financial situation. With the large variety available, there is a perfect loan arrangement for any business, big or small. Insta Auto provides technology to allow you to compare business car loan offers using the convenience of your smartphone.