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Finding the right business car loan for you

Are you ready to purchase a car for your business needs and not sure how commercial finance can work for you?  Whether you’re a sole trader, or a large organization, there are many different business car loans, and we are here to help you explore the right options for your unique situation.

The different types of business car loans

Let’s go through the different types of finance you can access when purchasing a vehicle through your business:

Chattel Mortgages

This is the most common type of business car finance that we assist our clients with at Alegra, and is where a business entity will buy and take ownership of a vehicle. 

The interest rates on chattel mortgages are generally lower than unsecured loans, because the asset is secured by the lender.

This type of finance will allow you to claim GST on your car purchase in the first financial year, plus you’ll also be able to claim tax deductions on your interest and the depreciation of the asset.

Finance Leasing

A finance lease for a vehicle will give you the use of a vehicle for a fixed term, at a fixed rate.  There are options for monthly or quarterly repayment schedules, and some lenders also offer seasonal payment schedules to fit in with your business’ cash flow across the year.

At the end of the lease you can return the vehicle, or make an offer to purchase it. 

Some clients prefer this option as it allows them to update their commercial vehicles on a regular basis, and the repayments for the lease can be tax deductible if the car is used solely for business purposes. 

Novated Leasing

Novated leasing for vehicles is a benefit some employers choose to offer their employees, whereby they will allow their employee to purchase a vehicle for personal use using pre-tax income.  This can be on a new or used vehicle, and is a three-way agreement between the employer, employee, and the lender.

Hire Purchase

A hire purchase for a car is similar to the finance lease outlined above, but when the final installment of the asset has been paid, ownership of the vehicle is then transferred to the purchase hirer.

Which business car loan is right for you?

The type of business car loan that you need will depend on many things including what percentage of the vehicle use is for business, how you want to claim tax deductions, and more.  It may be worth discussing these things with your accountant prior to purchase so they can give you sound advice on tax benefits and implications for your business.

I’m ready to get a business car loan

If you have found a vehicle that you would like to purchase, and you’re ready to take the next step in sourcing a business car loan, please get in contact with the Alegra Financial Solutions team. 

We are local, business car financing experts who can walk you through the options available for purchasing a car for your business needs.