Your guide to getting the right vehicle financing for your business
Do you have your eyes set on a vehicle for your business to continue moving? If you’re purchasing the vehicle for business use, making the right choices is important when it comes to vehicle financing.
What is a Business Vehicle Loan?
Financing for a business/commercial vehicle loan can be used to purchase a new or used vehicle such as a Car, SUV, Vans, Small trailers and more for your business.
How does a Business Vehicle loan work?
Amfin will help your business secure a loan for the amount you require and for a loan term of up to 5 years. We can also help you structure the loan in a way that suits you by looking at different deposit, repayment and balloon options.
Types of Business Vehicle Finance:
NEW VEHICLE LOANS:
Business loans for new vehicles can be secured for you quite quickly. A new vehicle loan is secured by the value of the vehicle and can be competitive due to the age of the asset being low risk.
USED VEHICLE LOANS:
A used vehicle loan is also secured by the value of the car and is easy for us to obtain for you. There are a few more things involved when assessing the value of the vehicle, risk involved and right lender for you. Our qualified team will be able to navigate this process for you to ensure we find the best solution for your business.
Do Business Vehicle Loans have balloon payments options?
Business car loans generally have balloon payment options at the end of the term. There are a few different options available to your business once the balloon term is due.
Your business might choose to have a balloon payment to keep monthly repayments low for cash flow purposes. The higher the balloon payment, the lower the monthly repayments will be in exchange for owing the lender a lump sum at the end of the loan term. Using a balloon payment option can help a business purchase a more expensive vehicle whilst keeping affordable monthly repayments.
What happens at the end of term?
At the end of term, if a balloon payment is due, your business will have a few available options, depending on the lender and terms of your agreement.
In general, your business may be able to do the following:
- Trade the vehicle in and purchase another with a new finance arrangement, and in the process repay the balloon amount.
- Repay the balloon with funds at hand or sell the vehicle separately
- Refinance the vehicle or balloon amount and retain the vehicle
Benefits of using a Business Vehicle Loan
- Asset ownership Status. Once the application has been approved, you can enjoy full ownership status of the equipment.
- Financial reporting benefits. The equipment is listed on your Balance Sheet as an Asset.
- Tax benefits. As the owner of the equipment, you may be eligible to claim the GST component of the purchase against your tax when you lodge your BAS statement. Certain types of chattel mortgages may also allow you to claim depreciation and interest.
- Imperfect financial history. Even with a less than perfect credit history, your application can still be accepted since the risk for the lender is reduced by securing the equipment against the loan.
- Low fees and interest rates. Chattel mortgages typically attract lower interest rates and fees than some alternative forms of finance, such as unsecured personal loans because the asset is secured by the lender.
- Flexible payment structure. You can choose to set up a balloon/lump sum payment at the end of the term to lower your monthly repayments. However, a large balloon payment will increase the amount of interest paid over the loan term.
Eligibility criteria for a Business Vehicle Loan?
Businesses, sole traders and self – employed individuals can all make use of business vehicle loans. To be eligible you will require the following:
- At least 18 years old
- An Australian resident
- Have a good credit rating and not be going through the process of bankruptcy
- Have a valid Australian Business Number (ABN)
- Is registered for Goods and Services Tax (GST)
Most lenders will also require that the business has been trading for more than 12 months, however the minimum length of trade varies between lenders.
What are other costs associated with a Business Vehicle Loan?
Besides the vehicle itself, there are several other costs associated with a vehicle purchase which you may be able to include as part of your commercial vehicle. These can include:
- Upfront costs associated with purchase such as:
- vehicle accessories
- dealer delivery charges
- the first-year of registration
- CTP Insurance
- stamp duty
- the novated lease establishment fee and
- the personal property fee can all be factored into the lease.
- Various running costs associated with the vehicle including:
- comprehensive insurance
- tyres as well as
- roadside assistance and servicing,
- repairs and maintenance may also be factored into the lease.
How do I apply?
You can apply for a business car loan by submitting a simple online application.
If you would like to know more or need assistance determining the best equipment financing solution for you, one of our experienced finance consultants are happy to assist, contact us today.
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