Business Car Loans

Business car finance (Chattel Mortgage, Commercial Hire Purchase) provides massive tax advantages that personal loans don't offer. Key differences: Tax deductibility - business loans let you claim interest and depreciation as tax deductions (personal loans = zero deductions). GST recovery - businesses registered for GST can claim back the 10% GST on purchase (personal loans = pay full GST). Interest rates - business loans are often 0.5-1% higher than personal rates, but tax savings far exceed the rate difference. Deposit requirements - business loans typically need 20-30% deposits vs 10-20% for personal. Vehicle usage tracking - business loans require logbooks proving business use percentage (80%+ business use = 80% tax deductible). Bottom line: if you're self-employed or have a business, ALWAYS use business finance even if rates are slightly higher. The tax benefits deliver far greater savings.

Tax deductions depend on your business use percentage and loan structure. What you can claim: Loan interest (100% of business use %) - $5,000 annual interest × 80% business use = $4,000 deduction. Depreciation - typically 15-25% of vehicle value annually using diminishing value method (e.g., $50,000 vehicle = $7,500-$12,500 year 1 deduction). Instant asset write-off - vehicles under $20,000 can be 100% deducted immediately for small businesses. Running costs - fuel, insurance, rego, maintenance, tyres (100% of business use %). Example: $60,000 vehicle, 80% business use, 32.5% tax rate might generate $6,000-$9,000 annual tax savings (more in year 1 with higher depreciation). Over 5 years, potentially $35,000-$45,000 in total tax savings. Always work with an accountant to maximize your claims legally.

A Chattel Mortgage is the most popular business vehicle finance structure in Australia (used for 70%+ of business vehicle purchases). How it works: You own the vehicle from day one (title in your name), the lender secures the loan against the vehicle (mortgage over the "chattel"), you make regular repayments (typically monthly), at loan end, you already own it (no transfer needed). Why businesses love it: You claim depreciation immediately (because you own it), interest is 100% tax deductible, claim GST back on purchase (if registered), you can sell the vehicle anytime (just pay out loan), balloon payments available to reduce monthly costs. Compared to alternatives: vs Hire Purchase (you own it sooner, can claim depreciation), vs Finance Lease (no large residual requirement, full ownership), vs Personal Loan (massive tax benefits). If you're self-employed or have a company/trust, Chattel Mortgage is usually the optimal structure.

Yes, but there's a depreciation cap called the "car limit." Current rules (2026): Luxury car limit is $69,674 for depreciation purposes. This means: You can buy and finance any vehicle at any price ($100k, $200k, no limit), but depreciation deductions are capped at the $69,674 threshold. Example: Buy $120,000 BMW X5, finance it via Chattel Mortgage, claim interest on the full $120,000 loan (100% deductible based on business use %), but depreciation deductions are capped as if the car cost $69,674. For vehicles over $69,674: Interest deductions unlimited (claim on full loan amount), running costs unlimited (claim on actual costs), only depreciation is capped. This means luxury vehicles still deliver substantial tax benefits - just not as much depreciation. Many business owners still buy premium vehicles ($80k-$150k) because client perception, comfort, and safety justify the investment, even with capped depreciation.

The ATO requires evidence of your business use percentage. Two methods: Logbook method (most accurate): Keep a logbook for 12 consecutive weeks showing every trip (date, odometer start/end, destination, business purpose). This establishes your business use % (e.g., 14,000km business / 18,000km total = 78% business use). Valid for 5 years, then update. Claim 78% of all vehicle expenses. Cents per km method (simpler but limited): Claim $0.85 per business km (2026 rate), maximum 5,000km claim ($4,250 maximum deduction), no logbook required but need evidence of business travel, suitable for low-km users only. Most business vehicle owners use logbook method for unlimited claims. Tips: Use apps like Driversnote or ATO myDeductions to track automatically, record even short business trips (bank, post office for business, supplier visits), clearly separate business (client meeting, site visit, business errands) from private (commute to regular workplace = private, personal shopping = private). ATO audits vehicle claims frequently - good records are essential.

Business vehicle finance typically requires 20-30% deposits, though this varies by business type and financials. Deposit scenarios: 20-30% deposit (standard) - most lenders require this for businesses, especially new businesses or self-employed. 10-20% deposit (good financials) - established businesses (2+ years trading) with strong financials may qualify for lower deposits. 0% deposit (rare) - available for well-established businesses with excellent financials and existing lender relationships. Factors affecting deposit: Time in business (2+ years = better deposit terms), annual revenue (higher revenue = lower deposits required), credit history (directors' personal credit impacts approval), vehicle type (commercial utes/vans may accept lower deposits than luxury cars), business structure (Pty Ltd companies sometimes get better terms than sole traders). If you don't have cash deposit: Trade-in equity counts as deposit, lease your current business vehicle and use equity, consider asset finance against other business equipment to raise deposit.

Yes, claim the business use percentage. Here's how it works: Keep a logbook for 12 weeks establishing your business use % (e.g., 65% business, 35% personal). Claim 65% of all vehicle costs: loan interest, depreciation, fuel, insurance, rego, maintenance, tyres. Personal use portion (35%) is NOT deductible (you pay this from after-tax money). Example: $60,000 vehicle, 65% business use, $18,000 annual total costs (loan + running), claim $11,700 as business deduction (65% × $18,000), pay $6,300 personally (35% × $18,000), at 32.5% tax rate, save $3,803 in tax annually. Acceptable business use %: 100% business use (rare - usually challenged by ATO unless dedicated business vehicle), 80-95% business use (common for business owners with separate personal vehicle), 60-80% business use (typical for sole vehicle used for business + personal), Below 60% business use (marginal for business finance - consider if commercial loan is worthwhile). ATO will audit extreme claims (100% or very low %), so keep accurate logbooks and be realistic.

This depends on your business structure and circumstances. Buy through company (Pty Ltd) if: You have a company and want asset protection (company owns it, separated from personal assets), company generates sufficient profit to use tax deductions (otherwise deductions are wasted), you want to avoid personal guarantees (some lenders don't require them for strong companies), planning to keep vehicle long-term and company is stable. Buy personally (sole trader/in personal name) if: You're a sole trader (no company = must buy personally), you might close the business (keeping vehicle personally avoids complications), personal credit is stronger than company financials (easier approval), you want simpler administration (personal assets, personal loan, personal tax return). Buy personally but structure for trust if: You operate through family trust (trustees buy personally but vehicle treated as business asset for trust). Recommendation: Consult your accountant BEFORE purchasing. Wrong structure can cost thousands in extra tax and create complex unwinding issues later. Most accountants charge $200-500 for advice that saves $5,000-$20,000 over vehicle ownership period.