Saroj Shah
27 Sep, 2022
Businesses involved in the delivery, transport, or movement of goods or services from one place to another require vehicles for seamless operations. Some might require a whole fleet. But what do you do when you cannot afford to buy or lease the vehicle with company funds? If it’s for business purposes majority of the times, the easiest way to access funds is through business vehicle finance. Don’t mix it up with a consumer car loans. They are not the same, and in this blog, we will try to help you understand their distinctions.
What is Business Vehicle Finance?
The term is self-explanatory! Business vehicle finance is the kind of financing option that allows one to secure funds to buy a car or a fleet for business purposes. It is a fixed-term financing option with a fixed interest rate. The loan terms vary between 2-7 years.
You can buy both used and new cars using the loan amount. There is no need for collateral, as the vehicle acts as an asset once you claim ownership. Once you claim ownership, you can enjoy tax rebates and benefits from it.
How is Business Vehicle Finance different from Consumer Car Loans?
A business vehicle finance is not the same as a consumer car loan. The most distinctive factor is when you buy a car with business vehicle finance, the vehicle should be used for business purposes atleast 50% of the times. On the contrary, you apply for consumer car loans to buy a vehicle for personal use. Unlike consumer loans, the business vehicle finance is funded under a company that is trading with an active ABN.
What can be bought with business vehicle finance?
You can buy the following vehicles using a business car loans:
- Two-wheelers
- Small and medium-sized cars
- Heavy-duty vehicles
- Vans
- Pick-ups
- Utes
- Trailers
- Buses
- Vans
Benefits that Further Define the Differences
A business vehicle loan has several benefits for the business owner and the company. Let’s learn a few:
- You can get a chattel mortgage for a business vehicle. It allows you to secure the whole amount or part of it from the lender. You must repay the amount over a term of 2-7 years. For a business car loan, you must apply with your Australian Business Number.
- The interest they charge you against the car loan can be leveraged for tax benefits. You can get reductions against the loan interest.
- Once you claim ownership of the car, even if the loan is not paid off, it becomes your asset. You can use the asset value to get a tax rebate.
There are other tax benefits that you don’t get when you apply for a personal car loan.
Conclusion
Do you want to buy a vehicle or a fleet for your business? Are you falling short of the cash amount to buy the vehicle? No worries because Broc Finance can help. They are the leading finance broker in Australia with competitive rates and favourable loan terms for people applying for business vehicle finance. Check out their offerings, compare the loan products, and reach out for a formal consultation today!