Answering the Common Queries about Business Vehicle Finance

Business vehicle finance; the term itself is self-explanatory. It’s the business financing solution you acquire to buy a vehicle that you will mostly use for your business and related purposes. Enterprises that require vehicle support to execute operations or boost sales apply for this loan when they fall short of finances to buy it upfront. Business vehicle finance is not a simple car loan. It is an investment towards the growth and development of the company; an expansion strategy.

Although a common form of business financing, one might have queries when applying for the first time. So, let’s get all your inquiries answered through this write-up.

1. What are the different types of business vehicle finance?

There is a variety of business vehicle finance under the commercial loan section.

• Chattel Mortgage: It is the most common type of business car loan where the borrower gets ownership of the vehicle immediately after buying, rather than after the end of the loan term. The car here gets the asset status.
• Hire Purchase: Commercial hire purchase or hire purchase means the borrower hires the asset intending to purchase it by the time the loan term ends. It entitles the borrower to be the owner of the vehicle for the entire loan term.
• Lease: This is similar to a commercial hire purchase. Here the borrower leases the vehicle, using the funds, intending to buy it by the end of the loan term. While hiring allows the borrower the option of adding a residual; in a lease loan, there is a residual value that’s regulated.

2. What is the term for a business vehicle loan?

The loan term depends on the loan term and the repayment cycle. Business vehicle finance has a loan term of 1-7 years. You get a maximum of seven years to pay off the loan amount. The loan term also depends on the condition of the vehicle. If it is a second hand or used car, the loan term can be lesser.

3. How does one qualify for a business car loan?

You need to fulfil the following criteria to qualify for business vehicle finance:

• Only ABN (Australian Business Number) holders can apply for business car loans. But they can be sole traders or registered companies.
• Furnish the intent to use the vehicle for business purposes for at least 50% of all time.
• The borrower should be able to furnish the essential documentation and financials as required.
• There should be a demonstrated trading history of at least six months. However, that clause is negotiable depending on the lender.

Conclusion

Are you seeking business vehicle finance for your business expansion? You can reach out to Broc Finance, Australia’s one of fastest growing finance brokers with more than a decade of experience in SME lending. They have a complete portfolio of business financing solutions you can leverage to suffice your cash flow needs.